Harrah’s Kansas City Casino Requests Rent Break for Closure
Harrah’s Kansas City Hotel & Casino in Missouri is seeking a rent break from its landlord, the North Kansas City Council, pointing out to the difficult closure period. The casino’s general manager told council members that during the 75-day period the gambling establishment had no revenue, urging them to consider some sort of concession.
Julie Sola, general manager of the casino located between Armour Road and the Missouri River, noted that since the re-opening, Harrah’s admissions were down 10% and the hotel was working with 65% capacity, compared to the usual 90%.
Harrah’s Impacted but Already Rebounding
The casino which rents the land but owns the building on it reported to the Missouri Gaming Commission just $7 million in adjusted gross receipts for March, compared to $18 million for the same month in 2019, and in April and May the gambling establishment made no money. Harrah’s seems to be bouncing back, though, posting modest gains in June, July and August, in comparison to the same three-month period the prior year.
The request from the Caesars Entertainment-owned property received a cool reception by council members, with some of them open to consider some sort of repayment plan, but far from forgiving payments. They expressed gratitude for the casino’s presence in the community, but were not inclined to offer help to one business when there were many impacted.
Describing the casino’s request as a reasonable one, some of the councilmen argued that other businesses might come and have similar requests, stating that they could not grant a rent break for one if they were not prepared to offer it to all. In other words, it is not reasonable for the City Council to do it.
Gaming and General Fund Money Declining
The city projects a $2 billion deficit in its general fund for this fiscal year and cannot deprive it from Harrah’s money which supports North Kansas City in two distinct ways, through the city’s gaming fund and through rent payments.
The gaming fund which collects gaming and admission revenues and pays for capital improvements and extraordinary services, has been in a state of decline since 2010, when it totaled $10.4 million. For comparison, it was only $7 million in 2019, and the estimated 2020 amount for the fund was even lower, $4.5 million.
Regarding rental payments, Harrah’s contribution amounts to the bigger from $2 million a year or 2% of gaming revenues, and this money goes into the general fund which supports basic city services. Much like the gaming fund, the general fund is also drying up, being $4 million in 2007, $3 million in 2020, and projected to be the bare minimum of $2 million for 2021.
Additionally, in a letter to the city Harrah’s noted it spent more than $1 billion to maintain benefits for furloughed employees through the end of September.
If the council approves a pro-rated amount of rent break for the 75 non-operational days for Harrah’s, the rent forgiveness would represent 3% of the general fund budget.
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