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Gaming Guru

Steve Tetreault

House Angers Gaming Companies

8 December 2005

and Howard Stutz

WASHINGTON -- The House voted Wednesday to offer tax breaks as incentives for hurricane-battered businesses to rebuild in the Gulf states, except for casinos and other recreation that critics said did not merit federal help.

The measure could set back gulf reconstruction efforts by Las Vegas-based gaming corporations such as MGM Mirage and Boyd Gaming Corp. and smaller companies whose casinos were damaged or destroyed by Hurricane Katrina and Hurricane Rita this summer.

The gaming industry was disappointed by the exclusion.

"The commercial casino industry should be treated like any other legal business working to rebuild along the hurricane-ravaged Gulf Coast, especially since our industry is the economic engine of the region," said Frank J. Fahrenkopf Jr., president and chief executive of the industry's main lobbying group, the American Gaming Association.

Almost two dozen Gulf Coast casinos were destroyed, damaged or temporarily closed by Hurricane Katrina on Aug. 29 and Hurricane Rita on Sept. 24. In Mississippi, Hurricane Katrina displaced 17,000 casino workers in wiping out 13 casinos in Biloxi, Gulfport and Bay St. Louis.

"We don't want special benefits; we just want to be treated like any other business," said Harrah's Entertainment Senior Vice President Jan Jones.

Harrah's had employed 9,400 workers in four Gulf Coast casinos. Three casinos in Biloxi, Gulfport and Lake Charles, La., were destroyed by the hurricanes and Harrah's New Orleans, Louisiana's largest casino, is closed indefinitely.

"For an employer of our size and the single most important driver of tourism in the Gulf Coast, we only want to be treated fairly," Jones said about the Gulf Coast gaming industry.

Boyd Gaming Corp., lost revenues from the Treasure Chest casino in New Orleans for seven weeks after flooding devastated the city. Company spokesman Rob Stillwell said the casino should receive the same benefits as other businesses in the areas affected by the hurricanes.

"There is no reason why a business down the street should benefit, and we can't," Stillwell said.

MGM Mirage is rebuilding the Beau Rivage, Mississippi's largest casino-hotel, and expects to reopen the business, which employed 3,100, in the next 12 to 16 months.

"This is just very unfair to the men and women of the casino industry," said MGM Mirage spokesman Alan Feldman. "All it does is delay the process and keeps prolonging the uncertainty."

Many Gulf residents and businesses have said they are looking toward the gaming industry to help the region's tourism base recover, he said.

"Any reasonable person can see how unfair it is to cut the casinos out of the tax relief package," Feldman said. "It was just a vindictive and punitive move on the part of Frank Wolf."

Wolf, a Republican representative from Virginia and a critic of the gaming industry, sought the exemption in a bill to help hurricane victims. He gathered support for the proposal from several dozen other lawmakers.

The bill creates a Gulf Opportunity Zone within hurricane-blasted counties in Louisiana, Alabama and Mississippi and offers increased tax credits and depreciation bonuses for qualifying businesses that try to rebuild.

The bill exempts private or commercial golf courses, country clubs, massage parlors, hot tub and suntan parlors, liquor stores and racetracks or other facilities "used for gambling."

The Gulf bill passed 415-4. The lawmakers who voted against it were Nevada Republicans Jim Gibbons and Jon Porter and Nevada Democrat Shelley Berkley, and Frank LoBiondo of New Jersey, a Republican who represents Atlantic City.

The Senate has passed tax legislation that qualifies the gaming industry for hurricane recovery aid, and the issue is expected to be decided in conference committee.

"We have been winked at not to worry, that this would be taken care of," Berkley said, meaning the House provision would be killed in conference.

The Bush administration has signaled it opposes the restrictions, and Mississippi senators and others including Harry Reid, D-Nev., were urging they be dropped.

Sen. Trent Lott, R-Miss., urged Republican leaders "to reject calls from some to discriminate against legal businesses in the Gulf region and pass this bill."

He added, "Mississippians living in tents and temporary housing are waiting for the jobs and opportunities this bill will create."

Gibbons said, "It is regrettable that some in Congress are willing to put the hardship of one displaced individual who may work for a refinery or a grocery store over another individual who happens to work in the gaming industry."

Berkley said Republican leaders agreed to insert Wolf's restrictions into the hurricane bill to win his support for more comprehensive tax break legislation the House is expected to debate later this week.

"I am outraged the Republican leadership caved in," she said.

Industry supporters have said casinos have employed close to 50,000 people and paid more than $760 million in taxes to Louisiana and Mississippi.

But Wolf argued the industry's vitality was a reason it should not be given aid.

He said casinos and recreation businesses such as liquor stores and golf courses often have been excluded from qualifying for federal development benefits.

"How can we stand up at a town meeting with our constituents and explain providing tax breaks to rebuild massage parlors, liquor stores and record profit-making casinos?"