The mayor's 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.
"Now is the time for us to think out of the box. Now is the time for some bold leadership, some decisive leadership," Nagin said Friday.
Nagin said gambling should be allowed in hotels that have more than 500 rooms, the majority of which are near the city's famed Canal Street. The plan will require legislative approval.
Gambling is already allowed using video machines in roughly half of Louisiana's 64 parishes, but there's only one full-scale, land-based casino, operated by Harrah's Entertainment Inc., in New Orleans.
Harrah's downtown casino has been closed since shortly before Katrina hit and the company has not given a timetable for possibly reopening the gambling hall.
Also, three dockside riverboat casinos operate in the New Orleans area.
Nagin made his proposal after Katrina virtually destroyed all 13 dockside casinos on the nearby Mississippi Gulf Coast. A bill to allow operators to rebuild land casinos close to shore has been passed by both the Mississippi House and Senate. Gov. Haley Barbour has said he will sign the measure.
There are currently nine hotels in the city with more than 500 rooms; Nagin said he thought five or six hotels would add casinos.
Nagin would not speculate what would be involved in getting his casino plan passed, but said he hoped Gov. Kathleen Blanco, who has campaigned against additional gambling in Louisiana, would include it in a recently announced special session, which is scheduled for November.
"Right now we're a cash-strapped city," Nagin said.
Nagin said he is not fond of gambling, and that he wished he had another solution, "but I know of no other way."
He said Harrah's would obviously have to agree to give up its exclusive rights and acknowledged he did not think the company would "do it for free."
Harrah's spokesman Alberto Lopez declined to comment on the proposal.
"I believe it would be completely inappropriate for me to comment at this time because it's the first time I've heard of it,"' said Lopez.
Dan King, general manager of the city's Sheraton hotel, would not discount the proposal.
"I can't speak for my company. I guess all ideas are worth investigating. I don't really have a comment because I haven't studied it," he said.
Nagin said he sent a letter to Blanco earlier this week with his "out of the box" ideas.
The letter asked for a 50 percent income tax credit for any worker in the city. Nagin also asked the governor to eliminate the tax on manufacturers' debt in the city and for an income-tax-free zone for manufacturers in the city.