Casino news source: Business Report - http://www.businessreport.com/
Casino changes
A potential casino resort could be a big deal for south Baton Rouge.
By Timothy Boone
Driving through the area along River Road a few miles south of the LSU campus, it's easy to forget that you're still in East Baton Rouge Parish. The hay balers and little wooden memorials that honor loved ones who died in car accidents are usually seen in more rural areas, but it's not uncommon to find them along this stretch of road. However, that area could potentially be transformed and turned into a riverboat casino resort.
A business connected with Pinnacle Entertainment, a Las Vegas-based casino company, bought a 35-acre tract of land between River Road and Nicholson Drive for $1.13 million earlier this month. Rumors are the company plans to build a 750-room hotel on the site. Next to the 35-acre tract is an adjoining 18 acres on River Road, on the Mississippi River batture. Pinnacle has reportedly struck a deal with Mike Wampold to buy the site in the next two months and could dock a riverboat casino on the site.
Pinnacle says it is considering transferring a casino license from a riverboat it bought in Lake Charles to either East Baton Rouge, West Baton Rouge or Jefferson Parish.
Pinnacle officials have refused to comment on a Baton Rouge casino, saying they are weighing the options of where to move the license and no decision has been made. The company has until Oct. 29 to tell the Louisiana Gaming Commission where it plans to move the casino license.
If Pinnacle decides to move into Baton Rouge, it has to first get approval from the gaming commission. As part of that process, it would have to present an economic impact study of what its resort would do to the Baton Rouge gambling market.
That could be the first obstacle. Earlier this year, LSU economist Loren Scott did a study of the local casino market for Columbia Sussex Corp. (the parent company of the Belle of Baton Rouge) and for Penn National Gaming (the parent company of Casino Rouge). Scott's report concluded allowing a third riverboat into Baton Rouge would cause one of the existing casinos to shut down or result in significant layoffs.
That's because the people who gamble in Baton Rouge are almost entirely locals. Nearly 93% of the people who gamble at the Belle or Casino Rouge come from the Capital Region, Scott says. Less than 4% of the gamblers come from outside Louisiana. Even though a new casino would lead to an expansion of the gambling market and more money being dropped in the slots and tables in Baton Rouge, Scott says the Belle and Casino Rouge would be cannibalized because they wouldn't be able to offer the number of slot machines Pinnacle would. "This would put the gaming control board in an peculiar position," Scott says. "Do they protect the franchises that are already here? Or do they allow wide-open competition? The latter isn't a model they've pursued in the past."
If the gaming board approves Pinnacle's request to move its license, then East Baton Rouge Parish voters would have to approve the third casino boat. An election could be held March 31. State law requires voter approval any time a riverboat casino seeks a new berth.
Pinnacle would be a tough competitor. The company, run by Dan Lee, has a reputation for doing high quality developments. Before taking over Pinnacle in 1999, Lee served as chief financial officer of Mirage Resorts for seven years, working alongside casino tycoon Steve Wynn while he built glitzy world-class resorts such as Bellagio and Mirage.
"Pinnacle's strategy is to do something unique," says Alan Silver, director of the casino resort studies program at the Tulane School of Continuing Studies' Mississippi Gulf Coast Campus in Biloxi, Miss. "They'll come in and do something different."
L'Auberge du Lac, Pinnacle's Lake Charles casino, is an example of that strategy. L'Auberge, was designed to look like a cross between a Texas Hill Country resort and a European villa. Unlike the multi-level riverboat casinos that dominated Lake Charles prior to its opening in 2 005, L'Auberge was laid out like the Mississippi Gulf Coast casinos, with a single floor packed with slot machines and table games.
Nick Danna, a senior gaming analyst with Sterne, Agee & Leach in New Orleans, says Baton Rouge can support a third riverboat. "Right now, the Baton Rouge market is probably the same size as New Orleans," he says. "But Baton Rouge is bringing in over $20 million a month in gaming revenue, while New Orleans is bringing in $60 million a month."
Danna says since re-opening in February, Harrah's casino in downtown New Orleans has brought in more revenue every month than the year before. That shows the strength of the Louisiana local gamblers market, because New Orleans hasn't seen tourists or convention visitors return to pre-Katrina levels.
"Is the Baton Rouge market as large as New Orleans? Probably not," he says. "But Pinnacle doesn't want to build anything as large as Harrah's in New Orleans."
Local casino operators aren't the only ones worried about another gambling boat coming to Baton Rouge. Some of the neighbors on River Road and Nicholson have come out against the project.
Lenore Roberts, who works as a sales manager for University Club Plantation, says once news broke Pinnacle had bought land nearby, she heard from four or five concerned residents. "There's a fear of things like that," she says.
Todd Waguespack, co-owner of Crown Construction, is building homes near the potential hotel site. Waguespack says he doesn't think the casino will hurt the demand for houses along River Road or Nicholson Drive. "That would bring a lot to the area, commercial wise," he says. "If they do a nice hotel, like in some of the other parts of the state, it would be a good thing for Baton Rouge as a whole."
Along with more commercial growth, something else the casino could bring would be an extension of Bluebonnet Boulevard from Nicholson to River Road. But even though the distance isn't very far (a few hundred yards at the most), there are obstacles, including railroad tracks, power lines and underground utilities.
"A lot of things have to be done for all that to happen," Waguespack says. "I don't know if we'll get a Bluebonnet extension. They may have to come into the casino by Gardere." |
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