Parts of Louisiana were left in ruins after Hurricane Katrina struck in 2005, but the casino industry there also benefited from the storm’s aftermath, according to researchers.
Millions of dollars in federal disaster aid brought with it the promise of jobs and resulted in a large infusion of out-of-state construction workers who frequented casinos and likely contributed to an increase in gambling revenue in that region, according to researchers and revenue data.
A similar situation could be in store for New Jersey, with the U.S. Senate expected to soon pass a bill authorizing $51 billion in Hurricane Sandy federal disaster aid, New Jersey Legislative Budget and Finance Officer David Rosen told state lawmakers earlier this year during a committee hearing on the state budget. Rosen said he spoke to Louisiana officials about their experiences following Katrina.
“One of the points my counterpart in Louisiana made was that there was this incredible influx of out-of-state construction people who came in for the rebuilding process, which had an enormously positive effect on the Louisiana casino revenue fund, which soared as these folks had nowhere else to spend the money,” Rosen said.
While Louisiana’s gambling revenue remained depressed one month after Katrina struck on Aug. 29, 2005, some casinos, particularly undamaged riverboat ones, saw substantial increases as early as a couple of months later.
For instance, Boomtown New Orleans, which reopened Sept. 30, 2005, following Katrina, drew gambling revenues of nearly $22 million in October, or 118 percent more than during the same month a year earlier, according to data from Louisiana regulators.
October gambling revenues for riverboat casinos as a group increased by more than 21 percent compared to the same month in 2004, according to the data. The trend continued in November when riverboat casinos drew in gambling revenues of $157 million, or 32 percent more than the same month in 2004.
Much of that increase was attributed to out-of-state workers who came to augment the construction force, said Janet F. Speyrer, associate dean for research and economics professor at the University of New Orleans. Because many people had evacuated the area, construction jobs were plentiful but workers were not, she said. The promise of jobs brought many from out of state to Louisiana, Speyrer said.
“These workers had lots of money, more than they usually had, and that kind of money can be spent on lots of things,” she said of workers. “They were getting cash payments, because if you were in certain parishes, the damage was so severe.”
Sandy may result in a similar phenomenon, although while federal disaster aid was approved for Louisiana and other areas shortly after Hurricane Katrina struck, New Jersey and other Northeast states are still waiting for federal approval.
“The money has flowed into Louisiana faster than it has flowed into New Jersey,” Rosen said. “I don’t know exactly how comparable it is going to be in terms of the time frame.”
Still, if the billions of dollars in aid are approved, spurring construction projects, the state could receive an influx of workers from outside the region as Louisiana did. If that happens, workers who come from areas where there is no gambling may be most drawn to Atlantic City, said Brian Tyrrell, associate professor of hospitality and tourism management studies for Richard Stockton College.
“It becomes really a novelty,” he said.
At the same time, it’s unclear whether the disaster aid would draw out-of-state workers given high unemployment in South Jersey. In addition, some of the worst Sandy damage is north of Atlantic City, closer to casinos in New York and other states, Tyrrell said.
Still, New Jersey officials also have said that part of the state’s estimated $37 billion in Sandy damage includes about $238 million in storm mitigation projects specifically proposed for Atlantic City. Those projects would presumably go forward should the Sandy relief aid legislation be enacted.
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