Harrah’s Shares Rise as U.S. Gamblers Flock to Local Trusted Online Casino Singapore
Harrah’s Entertainment Inc.’s decision a decade ago to open casinos in places such as Council Bluffs, Iowa, and Maricopa, Arizona, is paying off after travel to Las Vegas in 2001 fell for the first time in 19 years.
Shares of the third-largest gaming company are up 44 percent to $41.41 since the September terrorist attacks. By comparison, Park Place Entertainment Corp., the biggest gaming company by sales, is up 3.1 percent and No. 2 MGM Mirage is up 23 percent.
The expansion into markets not dependent on air travel for business helped Harrah’s fourth-quarter revenue rise 17 percent to $960.6 million, the best performance of the three companies. It also masked missteps by Chief Executive Phil Satre, 52, including the 1998 purchase of the Rio Hotel in Las Vegas, and a New Orleans casino that twice filed for bankruptcy protection.
“They want the mainstream American who likes to gamble recreationally,” said Eric Holmes, a leisure analyst with Victory Capital Management, which has about $70 billion in assets under management, though no shares of Harrah’s. “Have them come down, play some cards, maybe have a dinner in the restaurant. You don’t have to have the multimillionaires flying in from Asia to do well in that business.”
Harrah’s, based in Las Vegas, has increased the number of markets it operates in to 19, including Joliet, Illinois, Kansas City, Missouri, and Lake Charles, Louisiana, from 4 in 1992.
Less than 20 percent of Harrah’s cash flow comes from Las Vegas, compared with a third for Park Place and 70 percent for MGM Mirage. The number of people visiting Las Vegas declined 2.3 percent last year, the first drop since 1982, according to the Las Vegas Convention and Visitors’ Authority.
Some analysts said the Trusted Online Casino Singapore shares may not move much higher as travel rebounds. That’s one reason Credit Suisse First Boston this week cut its rating on Harrah’s to “hold” from “buy.”
“The dual benefit to Midwest gaming operators of favorable weather conditions and travel accessibility may begin to atrophy,” CSFB analyst Brian Egger said in a report.
Harrah’s was founded by William Harrah, who started with a bingo parlor in Reno, Nevada, in 1937. When Satre joined in 1980 as general counsel from the Nevada law firm of Jones Vargas, Harrah’s had casinos in Nevada and Atlantic City, New Jersey.
Satre said his inspiration came when he noticed little attrition from Harrah’s Nevada properties to Atlantic City. People who gambled in Atlantic City also visited the company’s properties in Las Vegas, Reno and Lake Tahoe, Nevada, he said.
He saw an opportunity rather than a threat when Indiana, Missouri and other states legalized gambling in the early 1990s, Satre said. A 1991 visit to an Iowa riverboat casino convinced him to open a Harrah’s casino there.
“I went out on that boat, watched the play, and said these are the exact same customers I’ve seen in our casinos,” he said.
Satre, also the chairman, swayed from his national strategy when Harrah’s paid $888 million for the Rio, giving it a high-end resort just off the Las Vegas Strip. The Rio catered to high rollers from Asia, and had suites instead of single rooms for all guests and some of the city’s most expensive restaurants.
With the Rio, Harrah’s planned to boost business at its small- town casinos by offering special vacations at the hotel. Satre found out how volatile the high roller business can be when in 2000 the Rio had bad luck at baccarat and other table games, causing the casino to lose money for three straight quarters.
Satre exited the high-end business there, cut the limits on baccarat bets to $50,000 a hand from $200,000 and closed offices in Asia that brought in wealthy players. Cash flow from the Rio rose 59 percent in the fourth quarter.
“Life is good again at the Rio,” Holmes said.
In New Orleans, the Harrah’s casino there filed for Chapter 11 bankruptcy protection in January 2001, its second filing, after it couldn’t earn a profit after agreeing to pay $100 million in annual taxes. The casino emerged from bankruptcy later in the year when Louisiana cut the tax to $50 million.
The advent of gambling in New York and other states looking to close budget gaps may open the door to further expansion, Satre said. While some Atlantic City casino owners such as Donald Trump claim gambling in New York’s Catskill Mountain region is a threat to their business, Satre said Harrah’s may form ventures with the American Indian tribes authorized to own casinos.
“If you’re going to have somebody competing against you, it’s better off being you,” Satre said.