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Harrahs and Pinnacle Purchase a Bad Deal for the City
New Orleans Levee Board President Mike McCrossen examined the fine print written of the proposed $70 million transaction and said it is easy to see why it is a bad deal after all for the city.
Harrah's Entertainment had planned to sell the two Lake Charles riverboat casino licenses to Pinnacle Entertainment.
The interest of Harrah's deal lies in an unusual provision that would impose a stiff financial penalty on the buyer, which is the Pinnacle, if either gambling license is transferred to New Orleans or the Shreveport-Bossier City area.
These places are where Harrah's has been operating casinos already. In Harrah's proposal, if the license where sold at the Pinnacle and then used it to open the riverboat in the next five years in either of the two locations, Pinnacle would have to pay an additional $50 million per license as an "adjustment fee".
The pending sale was the topic of the meeting held August 15 at the Gaming Control Board.
McCrossen said, "The practical effect of this (penalty) provision is to preclude riverboat gaming in Shreveport and New Orleans for five years. Given the limited number of riverboat gaming licenses, such a provision places a very real disadvantage to prospective gaming venues in New Orleans and Shreveport."