Treasurer Says Competitive Bidding May Be Best Financial Option for State

BATON ROUGE, LA – State Treasurer John Kennedy has called on the Louisiana Gaming Control Board to consider putting the state’s fifteenth and final riverboat gaming license up for competitive bid in order to maximize the state’s financial return.

Part of my job as State Treasurer is to suggest ways that the state can maximize its financial returns, said Kennedy. Money is tight at the state level. Governor Mike Foster has expressed his desire to revoke the fifteenth riverboat license in Louisiana. However, the State Legislature has not taken action on that proposal. So, if we are going to grant a fifteenth license, it just makes sense to get as much as we can for it.

One way to do that is to bid the license out, or at least consider what an applicant is willing to pay as one of the factors in determining who gets the license, Kennedy added.

Kennedy said he has discussed this option with Senate President John Hainkel and other state leaders. According to Kennedy, Hainkel says the option has merit.

In particular, Kennedy suggested the riverboat license procedure could more closely resemble the State Mineral Boards procedure for granting mineral leases.

The Mineral Board has the authority to bid out mineral leases on state lands. A bid procedure has worked quite well in maximizing the amounts oil companies pay to the state for the leases. Why shouldn’t the Gaming Board consider following the same procedure?, Kennedy asked.

He noted that the statute governing the Mineral Boards procedure gives board members the authority to accept the bid most advantageous to the state and do so upon whatever terms (they) consider proper.

Kennedy continued, Through this proposed bidding process, the board could take into consideration whether an applicant is willing to pay a higher up-front licensing fee, a higher annual franchise and license fee that is over and above the current combined 18 percent rate, or a combination of both. How much an applicant is willing to pay would not be the only factor considered in awarding the license, but it should be a major factor.

Currently, the state mandates that a license recipient pay an up-front licensing fee of $50,000 per riverboat for the first year of operation and $100,000 for each year per riverboat thereafter. The licensing fee also includes an annual 3 percent payment on net gaming returns. The recipient must also pay an annual franchise fee of 15 percent of net gaming proceeds.

Prior to his election as State Treasurer, Kennedy served for three and one-half years as secretary of the Department of Revenue. In that post, he sat as an ex-officio member of the Louisiana Gaming Control Board, where he often took the position that the riverboat gaming licensing process should be made open to the public.

Contact:
Delia Taylor, Communications Director
(225) 342-0010