New Orleans Is Big Loser as Harrah’s Casino Folds

Dreams of economic salvation for a city long down on its luck evaporated in the middle of the night when the last dice were rolled at the Harrah’s New Orleans Casino.

“We are just as surprised about this as everyone else is,” Brenda Thompson, a public relations official with the city’s first land-based casino, said of the decision to close Harrah’s at 3:45 a.m. Wednesday.

Casino officials said they were forced to make the move after Bankers Trust, Harrah’s lead bank, disclosed that it would not commit any more money to construction of Harrah’s permanent casino here.

The company that runs the casino, Harrah’s Jazz, filed for Chapter 11 bankruptcy protection later Wednesday.

Although the casino initially forecast monthly revenue of roughly $33 million, the numbers have never come close. Its best month was in July, when the revenue neared $15 million. Monthly revenue for the six months that the temporary casino has been in operation averaged about $12.8 million.

For New Orleans, the news is a disaster, said Mayor Marc Morial. “We cannot downplay it; we cannot suggest there is some easy fix. Layoffs are probable; cuts and reductions in city services are probable,” he said, estimating that the city may lose up to $24 million a year and up to 1,000 jobs.

The news is equally bad for Louisiana, said outgoing Gov. Edwin W. Edwards. In the past four years, the move to make gambling legal in Louisiana became the hallmark of Edwards’ Administration. The governor frequently has argued that one large, land-based casino and a series of riverboat casinos could be a permanent avenue out of the state’s economic blues.

“The closing of the temporary casino is an unfortunate development for over 2,000 men and women who were working as a result of the casino,” Edwards said. “It is also very bad budgetary news for the city of New Orleans.”

According to an economist at Louisiana State University, Edwards and Louisiana’s incoming governor, Mike Foster, should be worried. “It is really just about the worst thing that could happen at just about the worst time,” said LSU’s David Johnson.