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The first company to develop a riverboat casino in Lake Charles has sued the boat's current owner, saying Harrah's Entertainment Inc. did too little to protect it from Hurricane Rita and its proposed sale violates state and federal laws.
Jebaco Inc. filed a federal lawsuit Wednesday in new Orleans against Harrah's, Pinnacle Entertainment Inc., several limited liability companies and their insurers.
Although Jebaco sold its interest in the boat in 2000 to Player's International, the terms called for Jebaco to get $1.53 for each person who boarded the twin riverboats.
That payment continued after Harrah's bought Player's. However, the casino never reopened after the hurricane Sept. 24, and Harrah's sold the two-boat license to Pinnacle.
Pinnacle has said it won't pay the fee, because it will not be operating the boat at the original Lake Charles site.
Pinnacle, which would need a local-option vote to approve the move, wants to set up one casino next to its L'Auberge du Lac resort for a second, $350 million resort called Sugarcane Bay. The other license would be moved to either Baton Rouge or New Orleans' West Bank.
The state Gaming Control Board will act on the proposed sales agreement between Pinnacle and Harrah's at its Aug. 15 meeting in Baton Rouge.
According to the lawsuit, Harrah's should have done more to protect its two boats. "Several other riverboat gaming operators in Lake Charles took significant precautions to protect their vessels from the hurricane, including anchoring those vessels in the center of Lake Charles to prevent the vessels from ramming into docks or other embankments," it said.
Pinnacle's boat at L'Auberge Du Lac and the two owned by Isle of Capri Casinos Inc. all escaped major damage.
The lawsuit alleges that Harrah's wanted to get out of the Lake Charles market because "Harrah's executives did not feel that the Lake Charles facility befit the Harrah's name or was upscale enough to be a Harrah's facility."
"It was easier for Harrah's to ... contract with Pinnacle to monopolize and exclude competition in the casino gaming market than it would be for them to stay in the market and therefore have to recapitalize, pay Jebaco pursuant to the settlement agreement, and pay the City of Lake Charles," the suit states.
The company also claims that the sale would violate federal antitrust laws by forbidding Pinnacle to locate those it wants to buy from Harrah's either in eight northwest Louisiana parishes or the New Orleans area, where Harrah's has other casinos.
The West Bank of New Orleans, where Pinnacle already has a casino boat, would be exempted.
Pinnacle would have to pay Harrah's $100 million if it broke that agreement.
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