Louisiana Gaming On Up-Tick

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By Glen Haussman

The after effects of Katrina are still being felt in the Louisiana gaming market, but month by month it looks as if things are getting better. In fact, it’s fair to say Louisiana is continuing to stage its comeback as revenue continues to rise on a month to month basis. In October, gaming revenue was up 13.1 percent year over year to $194.4 million $178.8 million from last year.

Even more impressive is that the revenue is actually 8.7 percent higher than October 2004, even as the market has two less casinos in operation. Now closed are Bally’s Belle of Orleans and Harrah’s Lake Charles.

The Shreveport/Bossier market was down 9.0 percent, and Lake Charles was up 13.4 percent. Baton Rouge was down 30.5 percent. In New Orleans, riverboat revenues fell to $24.8 million, down 22.5 percent from $32 million. However, most of this decrease is attributable to Harrah’s New Orleans’ reopening. Now that the property has reopened, including a 450 room hotel which debuted in September people are flocking back to this popular casino adjacent to the French Quarter and convention center.

Much of this decrease is due to gamblers moving their bets to Harrah's land-based New Orleans casino, which was closed in October last year.

Overall Harrah’s turned in a dominating performance now that the New Orleans property is re-open. It was up 78.7 percent compared to Oct 2005. Horseshoe revenues fell 13.1 percent while Louisiana Downs revenues dropped 7.0 percent.

Pinnacle saw its aggregate revenues fall a substantial 7.3 percent, with a 25.7 percent gain at L'Auberge offset by a 33.4 percent decrease at Boomtown New Orleans. Penn National Gaming also saw revenue decline by a colossal 27.9 percent to $11.0 million at Casino Rouge. However, the property is still ahead of pre-Katrina incomes.

In other Louisiana gaming news, Columbia Entertainment announced this week that the Louisiana Gaming Control Board has unanimously approved the company’s plan to use bank loans and a subordinated debt offering to acquire Aztar Corp. The company can now finally close on the deal for its $2.75 billion purchase of that company and take possession of properties that are also located in Atlantic City and Las Vegas.

Columbia owner and CEO William J. Yung said that his privately held company is eager to assume ownership of Aztar. “The regulatory process has been an invigorating experience for our organization,” he said, “and we appreciate the advice, support and encouragement we have received from regulators in every jurisdiction. Now that the acquisition approval phase is over, we can focus on completing the deal and moving forward on our ideas for revitalizing the Tropicana brand.”

Additionally, Louisiana’s St. Mary Parish has been awarded the state’s 15th and final casino license for a riverboat casino. According to St. Mary Parish President Paul Naquin Jr., the parish will be signing a deal this week to bring the Amelia Belle riverboat to its shores, which will arrive there in January. First gambling cruises are expected to begin in February 2007.

Pinnacle Entertainment, Inc. earlier this week also completed the acquisition of certain Harrah's Entertainment, Inc. entities that own Lake Charles gaming assets. The acquisition includes two casino boats and related gaming licenses, one of which would be utilized at Sugarcane Bay. The Company has filed a proposal with state gaming regulators to utilize the other in Baton Rouge, Louisiana.

Concurrent with the purchase, Pinnacle completed the sale of certain of its Casino Magic Biloxi assets, including all of the real estate, to a subsidiary of Harrah's. In conjunction with these transactions, Harrah's received additional consideration of approximately $25 million from Pinnacle, as the negotiated price of the Lake Charles assets being acquired by Pinnacle was higher than the negotiated price of the Biloxi assets being sold. Each company will retain its respective insurance claims related to extensive damage resulting from last year's hurricanes.

Pinnacle will soon announce plans for the development of a resort in Baton Rouge.

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