From obscure start in Nev., Harrah’s now No. 1 in the U.S.

Jun 14, 2005 6:53 AM

It is costing Harrah’s Entertainment Inc. (HET) $9.4 billion to become America’s largest gaming company but Chairman and CEO Gary Loveman and his co-executives are more than willing to make the move. And, with the blessings of the Federal Trade Commission and Friday’s approval of both the Nevada Gaming Control Board and the Nevada Gaming Commission, both of which met in special session, Harrah’s on Monday closed on the purchase of Caesars Entertainment Inc. (CZR).

Utilizing an aggressive acquisition mode, Harrah’s has developed from a relatively small gaming company that moves its base to Memphis, Tenn., before settling in Las Vegas, to the owner and operator of 40 gaming properties in a dozen states in just 12 years. The merger with Caesars will result in annual revenues of more than $8.5 billion and a payroll involving nearly 100,000 workers.

This deal also makes Harrah’s the leader in "brand" names within the industry. In addition to its own name, it owns "Horseshoe" which it purchased from the Binions; Caesars, Flamingo and Rio.

Another highly recognizable name in the company’s portfolio is the World Series of Poker that the company plans to develop into a national activity.

As for its impact on the Las Vegas Strip, Harrah’s still remains a distant second to MGM MIRAGE Inc. (MGM) whose control of rooms catapulted to 37,500 rooms when it acquired Mandalay Resort Group earlier this year. Harrah’s Strip room count is now at 17,600 rooms.

On the horizon for the company is a racino that is under construction in Chester, Pa., and the possibility of a casino in Rhode Island in partnership with the Narragansett Indians.

Encore planning

In a filing with the Securities and Exchange Commission, Steve Wynn revealed that two subsidiaries of Wynn Resorts Ltd. (WYNN) were looking to modify certain mortgage note agreements as they prepare for the development of his second Las Vegas Strip project, Encore, to be built next to Wynn Las Vegas.

Commenting on the project, Wynn told the SEC, "Due to demand for the Wynn Las Vegas casino resort, continued strength in the Las Vegas market, and the desire to maximize the potential of their real estate assets, the issuers continue to enlarge and refine the scope of their Encore at Wynn Las Vegas project. They have elevated Encore to the status of a free-standing casino resort that will be fully integrated with Wynn Las Vegas. The purpose of the proposed amendments is to give the issuers additional time to finalize the scope of Encore."

Note holders are being asked to extend the deadline for approval of the Encore budget and plans from June 30, 2005 to Dec. 31, 2005.

Emerald victory

Owners of the Emerald Casino’s gaming license in Illinois won a victory from the courts last week when a county judge ruled that the gambling regulators should renew Emerald License according to a decision previously filed by the Illinois Appellate Court.

Emerald lawyers immediately called for an end to hearings being conducted by the Illinois Gaming Board aimed at revoking the bankrupt casino’s license, alleging that some Emerald investors had ties to organized crime.

State officials, however, insisted that the recent court order dealt only with the license renewal and had nothing to do with the revocation hearings.

Sitting on the sidelines is Isle of Capri Casinos Inc. (ISLE) that was the winning bidder for the Emerald license before regulators began the initial revocation hearings.

What’s next?

That’s what many in the gaming community were asking last week when Alex Yemenidjian, the former gaming executive who headed Metro-Goldwyn-Mayer Inc. until it was sold to Sony Corp., resigned from the MGM MIRAGE Inc. (MGM) board of directors.

Yemenidjian for several years partnered with Terry Lanni in operating MGM Grand for principal stockholder Kirk Kerkorian. Lanni was chairman and CEO and Yemenidjian held the posts of president and COO. But, when Kerkorian took over the operation of the Hollywood movie company he called on his protégé Yemenidjian to leave Las Vegas and focus on the movie business.

Shortly afterward, Kerkorian bought out Steve Wynn and his Mirage Resorts Inc. and merged those properties into his MGM Grand operation thus creating MGM MIRAGE Inc. with Lanni continuing as chairman and CEO and Jim Murren, a former Wall Street gaming analyst, adding the position of president to his previous title of chief financial officer.

In resigning from MGM MIRAGE’s board, Yemenidjian said he looked forward to becoming involved in the gaming industry again but this time as a principal.

Poker craze

Taking advantage of the current poker craze, Activision Inc. has received a license from Harrah’s Entertainment Inc. (HET) to create a computer-based game featuring the World Series of Poker casino tournament.

Without divulging financial information, Activision said the new agreement includes the exclusive rights to publish games for personal computers, game consoles and handheld products worldwide.

Harrah’s purchased the rights to both the Horseshoe name and the poker event when it acquired Binion’s Horseshoe Hotel/Casino from Becky Binion. It retained the rights to the name and the poker tournament when it sold the downtown Las Vegas facility to MTR Gaming Group Inc. (MNTG).

THE INSIDER: MGM MIRAGE Inc. (MGM) says it has cut its debt by $322 million since it merged with Mandalay Resort Group on April 25. Also, the company said it would report its results for the second fiscal quarter on Thursday, July 28.

Analysts at Merriman Curhan Ford have initiated coverage of WPT Enterprises Inc. (WPTE) with a "buy" rating.

Jury selection for the retrial of Rhode Island dog track executives Dan Bucci and Nigel Potter will begin in Worcestor, Mass., on July 12.

Columbia Sussex Corporation took possession of Caesars Tahoe Hotel/Casino on Friday following approval of the acquisition from Caesars Entertainment Inc. (CZR) by the Nevada regulators.

Gaming revenues for the 12 Atlantic City casinos for the month of May rose 0.8% to $420.2 million, according to the New Jersey Casino Control Commission.