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US – Louisiana task force recommends raft of new legislation

By - 18 January 2018

The Riverboat Economic Development and Gaming Task Force in Louisiana has recommended that the state’s 15 licensed riverboats casinos should be able to move onshore and become land-based casinos.

Senate lawyers will now draft bills based on the recommendations, which will be presented in the regular legislative session starting March 12.

Republican state Sen. Ronnie Johns, of Lake Charles, who will sponsor the bills, said: “There will be some opposition but the Legislature as a whole realises the impact this industry has on our state’s budget. We’ve started with something we think is very manageable, something that I think has an excellent opportunity to pass.”

The recommended legislation would allow riverboat casinos to operate on land within 1,200 feet of where they were moored. Gaming floors are currently restricted to 30,000 square foot with the new laws allowing for bigger gaming floors to accommodate bigger slots machines and games along with buffets, bars and restaurants. The proposal would allow for 2,365 gaming positions.

It would also abolish the need for paddle wheels, a captain and other marine crew, as well as addressing issues which currently tax ‘promotional play’ at the same level as normal play.

Louisiana, along with a few other states, pioneered the riverboat gaming model in the early 1990s. It currently has 24 casinos that generate $4.8bn in economic activity, support nearly 32,000 jobs, and generate $1.3bn in federal, state and local tax revenues.

Ronald Jones, Chairman of the Louisiana Gaming Control Board, said: “I think we’ve started a discussion that’s been years in the making. We can make some meaningful changes. We can promote a reinvestment in this economy in Louisiana. I think we can create some jobs.”

While Louisiana was an early entrant, the state is now boxed in on all sides. To the east, Mississippi’s 28 casinos compete for the same customer base. To the northwest, Oklahoma is home to the second largest tribal gaming market in the U.S. with more than 120 casinos. And Oklahoma vigorously competes with Louisiana for the lucrative Dallas market. Meanwhile, tribal leaders and some state legislators are pushing to legalize gaming in Texas, which would pose a direct challenge Louisiana.

American Gaming Association (AGA) President and CEO Geoff Freeman, welcomed the recommendations. He said: “The Louisiana laws and regulations that got gaming this far in the first 25 years cannot get gaming where it needs to go in the next 25 years. Every reform that sounds simple and easy will have constituents on either side. Businesses that have invested significant capital based on the current regulatory system will understandably want to protect those investments.”

Keith Smith of Boyd Gaming recently argued that surrounding states now offer casino operators a more favourable tax environment, which takes customers away from Louisiana and makes it harder for its casinos to reinvest in their properties.

Mr. Freeman added: “Louisiana currently imposes a 21.5 per cent tax on promotional credits – one of the most powerful marketing tools for attracting customers. In Mississippi, the tax is on promo credits is zero. Indiana faced a similar tax challenge a few years ago. Gaming expansion in Ohio and Pennsylvania created an intensely competitive environment for Indiana casinos. Lawmakers responded in 2014 with legislation that modified taxes on promotional credits so the first $7m of ‘free play’ is untaxed. It was a step in the right direction, but today other states, like Mississippi, Nevada, Ohio, Pennsylvania, Florida, Kansas and Maine, don’t tax free play at all.

“Games targeted to these preferences often come with a larger footprint than slots or traditional table games. Scarce casino space is being taken up in part by drink stations, cages and kiosks. These non-gaming uses should not be counted as part of the gaming floor. If Louisiana wants to control the scope and scale of gaming, it should look at gaming positions rather than square footage.”

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