04:57 PM CDT on Tuesday, October 11, 2005

Associated Press

BATON ROUGE, La. -- Gov. Kathleen Blanco delivered a decisive blow Tuesday to New Orleans Mayor Ray Nagin's proposal to revitalize his devastated city by placing casinos in large hotels, saying gambling shouldn't be the basis for economic development in New Orleans.

Nagin said he hoped the governor would include the gambling proposal in a special session scheduled for November. Blanco's office is drawing up the formal outline of legislation that can be considered during the session, and the governor will not include Nagin's gambling proposal, her spokeswoman Denise Bottcher said.

A call to Nagin's office for comment on the governor's statement was not immediately returned.

Blanco issued a statement that urged "caution ... in looking to the expansion of gambling as a quick fix to our economic problems in the city."

"I have never believed that gambling should be the base on which to build our economy," she said.

Instead, the governor said people and businesses need federal tax credits and a stronger public education system to stimulate growth and reconstruction in New Orleans.

Reception to Nagin's proposal -- unveiled Friday -- already had been hesitant and lackluster by many politicians.

The mayor had suggested the casino proposal as a way to jump-start New Orleans' economy and help its people get back to work in the wake of Hurricane Katrina.

The plan calls for a large-scale gambling area in the city's central business district, stretching from Interstate 10 on the west to the Mississippi River on the east. Hotels that have more than 500 rooms, the majority of which are near Canal Street, would be able to add gambling, under Nagin's plan.

But the proposal would require legislative approval and Harrah's Entertainment Inc., which runs a land-based casino in New Orleans, to give up its exclusive gambling rights.

(Copyright 2005 by The Associated Press. All Rights Reserved.)