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Best of Howard Stutz

Gaming Guru

Howard Stutz
 

Louisiana Casino Revenue Jumps

22 March 2006

LOUISIANA -- Even with Harrah's New Orleans contributing just 13 days of revenue to the total, Louisiana casinos continued to rebound from a hurricane-affected fall, posting a 13 percent increase in gaming win in February.

During the month, Louisiana casinos took in $214.8 million from gamblers, the state's Gaming Control Board reported Tuesday. Three of the state's 15 riverboat casinos are still closed, but gaming revenue jumped statewide from $190.1 million a year ago.

Louisiana was hit hard by Gulf Coast hurricanes in August and September after Hurricane Katrina blasted New Orleans on Aug. 29. Four gambling operations, including the state's largest casino, Harrah's New Orleans, operated by Las Vegas-based Harrah's Entertainment, were affected.

Hurricane Rita slammed into Lake Charles on Sept. 24, disrupting the business of five casinos.

Louisiana's 12 operating riverboats won $168.9 million in February, a 25.5 percent increase from $134.5 million in February 2004 when 14 riverboats were reporting revenue.

As Louisiana rebounds, Las Vegas-based Pinnacle Entertainment has been gathering the bulk of the state's gaming revenue. The company's L'Auberge du Lac in Lake Charles reported the state's highest gaming win in February, $26.2 million, while Boomtown New Orleans was Louisiana's third-ranked casino with $21.8 million in gaming revenue.

Because of hurricane-displaced business in New Orleans, Boomtown gaming revenue jumped 99.4 percent compared with $10.9 million collected in February 2005. In January, Boomtown's gaming revenue was $24.6 million, a 141.6 percent increase from January 2005.

Pinnacle, which announced a $2.1 billion deal last week to acquire Tropicana parent Aztar, operates a third Louisiana riverboat, Boomtown Bossier City, which reported gaming revenue of $8.3 million in February.

"Pinnacle Entertainment produced strong results at two of its three Louisiana casinos," said CRT Capital Group gaming analyst Steve Ruggiero. "We consider this a strong result, especially with the reopening of Harrah's. The incremental revenues will provide a considerable contribution to Pinnacle's first quarter of 2006 operating profit."

Harrah's New Orleans reopened Feb. 17 and collected $13.8 million from gamblers during the month. The casino had remained closed for more than five months.

Before the hurricane, Harrah's New Orleans would win an average of $28 million from gamblers in a typical month, highest in all of Louisiana. In 2004, the casino had gaming revenue of $320 million. In 2005, operating for less than eight months, the casino reported gaming revenue of $229.4 million.

"The numbers are encouraging, and I'd say we're off to a good start," Harrah's spokesman David Strow said. "We opened right before Mardi Gras in order to capture the business from the start of New Orleans tourism. We were closed for a long time."

Strow said Harrah's marketed the reopened New Orleans casino to its customers enrolled in the company's player loyalty program.

Harrah's two riverboats in Lake Charles and the Belle of Orleans in New Orleans remained closed because of hurricane damage. Harrah's has said it is looking to exit the Lake Charles market while Columbia Sussex, owners of the Belle of Orleans, is exploring a plan to move its boat to St. Mary Parish.

Harrah's riverboat in Shreveport, the Horseshoe, reported gaming revenue of $23.4 million in February, second-highest in the state.

Another Las Vegas-based casino operator, Boyd Gaming Corp., also prospered during the month. Revenue at the Treasure Chest in New Orleans was $16.9 million, a jump of 77.9 percent from $9.5 million a year ago. Also, gaming revenue of at Boyd's Delta Downs racino outside of Lake Charles climbed 21.4 percent, with the casino winning $14.2 million, compared to $11.7 million a year ago.

Deutsche Bank gaming analyst Marc Falcone said both Boyd Gaming and Pinnacle Entertainment will continue to succeed despite the reopened Harrah's because of their casinos' locations outside of the New Orleans city center.

Bear Stearns gaming analyst Joe Greff said the statewide gaming revenue results are also benefiting from an influx of construction crews and hurricane relief workers that have relocated to the region for the post-hurricane reconstruction. In addition, Louisiana casinos are seeing an influx of gamblers displaced by the mostly closed Mississippi Gulf Coast casino market, Greff said.