Private firms betting on Harrah’s

Steve Tripoli Oct 2, 2006


KAI RYSSDAL: So what’s your game? Dice? Cards? Roulette? Whatever it is, Harrah’s has it and private investors want it. They’re making a $15 billion bet on Harrah’s, America’s biggest casino operator if you measure by revenue. And analysts say the offer could come up all aces. Marketplace’s Steve Tripoli has more.

STEVE TRIPOLI: $15 billion seems like a lot for a gambling outfit, or excuse me, a gaming firm in the industry euphemism, but the Harrah’s bid is about more than just gaming.

Analyst Brian Gordon at Applied Analysis in Las Vegas says gambling companies are moving way beyond cards, dice and even big stage shows.

BRIAN GORDON: “The marketing teams have really propelled the gaming industry to full-service entertainment that not too many industries can offer at this point.”

Don’t forget that casinos have become big convention and even family entertainment sites too.

Today’s offer from two private-equity firms is for 22 percent more than Harrah’s closing stock price of last Friday.

Analyst Joe Weinert of Spectrum Gaming Group in New Jersey says that’s not necessarily too much for Harrah’s.

JOE WEINERT: “They are geographically diverse. They have marquee properties in both Las Vegas and Atlantic City. They have growth opportunities overseas.”

Including projects in Spain, Slovenia and the Bahamas. Harrah’s is trailing competitors in the big Asian gambling boom.

But Weinert says Harrah’s is playing into a very favorable domestic environment.

WEINERT:“Gaming has become mainstream in the United States, and as it becomes mainstream America you’re gonna find more, so-called mainstream companies, stepping in to get a piece of the action for themselves.”

Investors, casino companies and governments all see casinos as attractive plays these days.

And with many states that border casino states piling on — not to mention Indian tribes, racetracks and more — gambling’s night may still be young.

I’m Steve Tripoli for Marketplace.

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