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New Orleans Finds Gaming Is an Urban-Revival Gamble

By Sam WalkerStaff writer of The Christian Science Monitor / June 13, 1995


WHEN the River City gambling complex opened in New Orleans, developers expected cabfuls of cash-toting tourists to pour into its twin riverboat casinos. Instead, a trickle of mostly local gawkers showed up to sample the free jambalaya, pump a few slot machines, and leave.

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After just 60 days, River City's owners shut down last week, laying off 1,500 employees. While other gambling boats around the country have failed, it has usually been in the face of stiff competition. River City's troubles, by contrast, come at a time when gaming in New Orleans is still in its infancy.

Is this an omen or aberration?

With cash-strapped cities such as Detroit and Pittsburgh toying with the idea of downtown casinos, New Orleans has become the nation's premier test case for gambling as a catalyst of urban revival. Next year, in the heart of New Orleans, Harrah's Jazz Company will open one of the world's largest land-based casinos. Civic leaders here are counting on it to attract more tourists and boost tax revenues.

Though some experts say the $223 million disaster at River City does not spell doom for Harrah's, it's a signal that gambling may not be the silver bullet for a sagging economy.

"We went in with doubts," says New Orleans city planner Kristina Ford. "This is an empirical experiment. Never before has the casino industry come into an established urban area."

So far, the results have been disappointing. A riverboat owned by the Hilton Hotel has struggled, another boat left the city in March, and a temporary Harrah's casino, opened in May at the New Orleans Municipal Auditorium, has reportedly generated only half the revenue it expected. While the slow business can be partly attributed to last month's disastrous flooding here, River City's demise is taken by some as a bad omen.

"Wall Street looked at New Orleans as a natural for gaming," Joe Buckley, an analyst for Bear Stearns in New York, said recently, "but so far it has yet to be proven."

Local gambling opponent C.B. Forgotson put it more bluntly: "Going to New Orleans to gamble makes about as much sense to most people as going to San Francisco to eat Cajun food."

But other analysts warn against reading too much into the failure of one riverboat. William Thompson, a professor of public administration at the University of Nevada at Las Vegas, says that nationally, gambling is booming, and in other parts of Louisiana, including suburbs of New Orleans, riverboats are doing well. "It's all a matter of marketing," he says.

For a city to be a gambling destination, Professor Thompson says, its venues have to cooperate to attract out-of-town money, as they do in Las Vegas, rather than fighting over local dollars.

River City flopped, he argues, for two reasons: first, because suburbanites will not go downtown to gamble when they can go to safer casinos nearby, and second, because riverboat gambling is not a powerful enough lure for outsiders. "Plenty of tourists are coming to New Orleans," Thompson says, "but going to gamble on a boat is not what they consider a New Orleans experience."