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Gaming Guru

Rod Smith
 

Inside Gaming: Casino Chatter Centers on Mergers

28 January 2003

Mergers and acquisitions. Don't ask us where it's coming from, but that seems to be the talk of the town, at least among casino executives. And they all suddenly seem to be talking the same language.

"Gaming is a mature industry." Whatever that may mean, it seems to have happened just yesterday. The way mature industries grow, they say, is by acquisition.

The most discussed large-scale marriage seems to be between Harrah's Entertainment Corp. and MGM Mirage, even though executives of both companies remain mum about p rospects. Some sources say lots of little deals, such as Park Place Entertainment or MGM Mirage picking up Argosy Gaming Co., are more likely.

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Wally Barr, the new top honcho at Park Place Entertainment Corp., is reportedly making headway in the search for a successor as chief operating officer, his previous position. Wall Street is betting he goes outside Park Place ranks and hires a powerhouse to succeed him Industry sources say he's even looking outside the gaming industry where top talent is tied up, especially by MGM Mirage and Wynn Resorts, which have already fought their own dual over top talent. Word is the talent will be on board by the May board meeting, and the new COO will have succession rights. Without the second in command, the Park Place team is a half-full glass. However impressive the vintage, it won't draw buyers.

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Geographic diversification could end up taking a bite out of Nevada's top casino companies. The tax debate is heating up for casino companies, and not just here in Nevada.

Harrah's government affairs guru Richard Klemp was banging on doors in Iowa last week, making the case to lay off raising taxes on riverboats. The Iowa Supreme Court in July ruled that taxing riverboats at just 20 percent but race tracks at 32 percent is verboten.

Legislators are talking about going to the highest common denominator, which could take a bite out of operators such as Harrah's. Casino operators want the lowest common denominator. The debate fits with the trend nationally, with state and local governments outside Nevada seeing the industry as a rich cash cow, ready for milking.

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Happy New Year's. Las Vegas gaming operators are having their hopes dashed for Chinese New Year's. The holiday traditionally is a benchmark as high rollers from Asia drop bundles at the tables here in Las Vegas. This year, however, reservations for the Feb. 1 holiday from visitors who usually lay down larger bets have been tepid and cancellations are starting to roll in as the threat of war hangs over the leisure travel industry. The operators here are holding occupancy rates up, but that may not help their table play volumes, which are proving to be the Achilles heels of the industry.

The Inside Gaming column is compiled by Gaming Wire Editor Rod Smith. You can contact him by phone at (702) 477-3893, fax (702) 387-5243 or e-mail at rsmith@reviewjournal.com.