Inside Gaming Column: Harrah's Keeps Hopes High for Caesars - Thursday 20th of April 2006

by Rod Smith

Las Vegas Gaming Wire

Harrah's Entertainment, which bought Caesars Entertainment last year for $9.4 billion, is turning competitors' heads with its high hopes for Caesars Palace. Industry insiders say its goal is to use the 40-year-old resort to generate, before the end of the decade, more than $400 million in annual cash flow earnings before interest, depreciation, taxes and amortization. Today, that would put it ahead of every other Strip hotel-casino, save Bellagio (with just more than $400 million in cash flow). Right now, Caesars Palace's cash flow, a key measure of profitability, is hovering around $200 million a year. Meeting the new owner's mark will be no mean feat.

Legal immigrants working in the gaming industry tell us the brouhaha over immigration is little understood among undocumented immigrants here or their families south of the border. Illegals see themselves as heroes; so do their families. They come here from devastating poverty to support families on the other side of a border. They obey U.S. laws, work for U.S. companies, pay U.S. taxes and hope to become citizens. Treating them like felons, they argue, won't do anything to change the attitudes or stem the tide.

Station Casinos executives brag that more than 80 percent of their revenues still come from gambling, despite industry trends toward amenities. That may explain why Station will break ground on its North Las Vegas casino in 2007 and open it in 2008, why four other new projects are being designed and why existing casinos are expanding. Station Casinos says it is betting on the new growth in the Las Vegas market, but it says it is also refusing to rule out a project in Atlantic City.

Room rates, the clearest barometer of demand for Strip vacations, bombed for the coming week, rate surveys found. Still, Wall Streeters say not to fear. At first blush, average daily rates are down by as much as a quarter compared with mid-April 2005. However, analysts say the unusually weak convention calendar for the week is to blame. Business will pick up strongly next week as the National Association of Broadcasters and its 170,000 attendees come to town.

Pro hockey player Darren McCarty morphed into a poster boy for problem gambling last week. It turned out he was in hock to Bellagio for $100,000 and the Palms for $60,000, his Chapter 7 bankruptcy petition showed. He also claimed to owe $25,000 to Detroit's MotorCity Casino. McCarty listed assets of $1.9 million and debts of $6.2 million. It doesn't look as if he could afford the gambling.

Gaming Wire Editor Rod Smith can be reached by phone at 477-3893 or by e-mail at rsmith@reviewjournal.com.

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