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Best of Liz Benston

Gaming Guru

Liz Benston
 

Rita Casino Damage Less Than Feared

26 September 2005

LOUISIANA -- Reports from some casino companies today indicate that Louisiana casinos sustained relatively modest damage from Hurricane Rita, which touched down just east of the Texas-Louisiana border early Saturday.

Neighborhoods in southwest Louisiana and eastern Texas experienced extensive flooding though Houston, a major feeder market for casinos in Lake Charles, La., escaped a direct hit. The Lake Charles area appeared to receive the brunt of the storm, analysts said.

By contrast, Hurricane Katrina decimated casinos and surrounding neighborhoods along Mississippi's Gulf Coast last month, flinging several of the gambling barges hundreds of yards ashore.

"Rita's impact appears less than initially feared," Morgan Stanley stock analyst Celeste Brown wrote in a research note to investors today. "Gaming assets in Lake Charles were damaged but it appears as if full rebuilding may not be necessary. While the city of Lake Charles sustained some significant damage and it will likely be some time before business comes back, our initial read is that the community is far less devastated than New Orleans."

Deutsche Bank stock analyst Marc Falcone said Rita caused "significant flooding" and potential structural damage at Harrah's casino in Lake Charles. Some press reports have indicated that the casino, which consists of two boats moored together, has come loose from its moorings.

Harrah's spokesman David Strow said this morning the company can't yet confirm any of those reports.

"We need to get people in there to evaluate the situation," Strow said. The company is sending a team this afternoon to assess the damage and is working to set up a separate toll-free employee hotline for Lake Charles workers to check in with the company.

Boyd Gaming Corp.'s land-based Delta Downs racetrack casino in Vinton, La., just west of Lake Charles, appears to have sustained only minor damage, Falcone said.

Boyd Gaming spokesman Rob Stillwell said "there was some damage" but that the company is still assessing it.

Pinnacle Entertainment's $365 million L'Auberge du Lac resort at Lake Charles, the region's most expensive riverboat casino, received "relatively minor damage," while the property's estimated 2,800 employees are believed to be unharmed, the company's Senior Vice President of Marketing Kim Townsend said.

"We hope to reopen as soon as we can," Townsend said. "Part of that is dependent on restoration of power and other services to the area as well as approvals by state and local officials."

The property remains closed along with the company's Boomtown New Orleans casino, which didn't receive any additional damage because of Rita, Townsend said. The company hasn't given an opening date for Boomtown in part because of uncertainties about when New Orleans will be accessible to visitors, she said.

Katrina destroyed Pinnacle's third casino in the region, Casino Magic in Biloxi, Miss.

The L'Auberge resort has become a staging area for 600 employees of Entergy, the regional energy company, while Boomtown casino also served as a second staging area for energy technicians in that area.

In a statement today, Isle of Capri Casinos said its two riverboat casinos in Lake Charles -- the Crown and the Grand Palais -- "appear to have weathered the storm fairly well."

"Working closely with state and local authorities, we look forward to reopening the Isle-Lake Charles as soon as we can safely do so," Isle of Capri President and Chief Operating Officer Tim Hinkley said.

The company said power has been restored at its Isle of Capri casino in Biloxi. The hotel is housing emergency workers but its casino will need to be replaced. Several hundred people have returned to work at the hotel to provide housekeeping, security and limited food service, the company said.

Isle of Capri and Pinnacle officials said their companies carry property damage and business interruption insurance for the damaged casinos. Both companies have greater exposure to the affected region than competitors. Boyd and Harrah's also have insurance coverage for their properties, analysts said.

Also closed Monday was the Coushatta Casino Resort on the Coushatta tribal reservation at nearby Kinder. A tape recording answered the telephone at the casino, saying it was closed until further notice. A casino spokesman could not be reached.