World Series of Poker: Rivers Run Through It

LAS VEGAS, Nevada -- Harrah's Entertainment Chairman Gary Loveman views the World Series of Poker much as he views one of the casino company's hotel operations.

It's all about the brand.

For Harrah's, the gaming industry's largest operator, it's three-year ownership of poker's iconic event has been leveraged into a year-round competition involving not just the six-week tournament at the Rio -- the World Series of Poker's home venue in Las Vegas -- but play at the company's casinos throughout the United States.

Loveman, who engineered the purchase of the World Series of Poker from the Binion family in 2004, said the game has expanded enormously. The brand is just as important to the company's bottom line as the Harrah's, Caesars and Horseshoe casino names, and Harrah's Total Rewards, an industry-recognized marketing tool that is both a customer recognition program and player tracking system.

"Anyone who is a poker enthusiast knows the World Series of Poker is the game's most important tournament," Loveman said. "We've been able to take the important steps necessary to monetize this brand as the signature event of this category. We've also been able to attract a very distinguished group of sponsors that has helped us grow our brand."

The World Series of Poker is now in its 37th year and in the midst of its current 45-event competition. After poker's world champion is crowned Aug. 10 at the Rio, the tournament hits the road. Harrah's will bring its secondary World Series of Poker Circuit events to 11 different company properties in nine months, including Tunica, Miss.; Council Bluffs, Iowa; San Diego; and New Orleans. The competition serves as a lead-in to the 2007 World Series of Poker.

Meanwhile, through the company's relationship with sports television cable giant ESPN, legions of poker-hungry viewers will be able to watch weekly broadcasts of taped competition from Harrah's casinos.

Televised poker not only lets Harrah's boost awareness of the World Series of Poker, but also its casino properties in nontraditional gambling jurisdictions.

"That's a fair assessment," Loveman said. "It does help raise the recognition level of those casinos."

It also helps the balance sheet.

Crowds associated with the World Series of Poker flooded the Rio for almost six weeks last year, helping increase the casino's cash flow to $43 million, $9 million more than the year before.

Analysts believe the poker-interest-fueled customer surge is taking place on a larger scale this year at the Rio. Also, they say, Harrah's casinos that are hosting Circuit events will likely benefit from surging visitor traffic.

"Either at the Rio or wherever the event takes place, the Harrah's properties love the World Series of Poker," Deutsche Bank gaming analyst Bill Lerner said. "Poker tournaments bring more bodies into the properties and offer a number of different revenue streams. These star poker players have huge followings of fans. Harrah's can do these regional events because they have properties in numerous regions."

Harrah's wants to be viewed as the nation's casino operator most synonymous with poker. The company offers poker at all but a handful of its 37 American-based casinos, a combined 407 tables at the end of March.

Harrah's operates 80 poker tables in Atlantic City between its four properties, 23 poker tables at Harrah's New Orleans, and 33 poker tables at Caesars Indiana, which is in Elizabeth, just west of Louisville, Ky.

On the Strip, Harrah's operates 98 permanent poker tables at seven casinos, including a 30-table poker room at Caesars Palace, which opened last year at a cost of $12 million.

In Nevada, poker rooms earn a percentage of each pot in a game, capped by state law at 10 percent.

During the World Series of Poker, Harrah's takes a percentage of the buy-in for each event to pay expenses, including paychecks for the more than 500 dealers hired to work the tournament.

Howard Greenbaum, Harrah's vice president of specialty games for the Las Vegas region, said the percentage varies based on the cost of the buy-in. For the $10,000 buy-in no-limit Texas hold'em world championship, Harrah's will take 6 percent off the top, 4.5 percent to the company and 1.5 percent to dealers. Greenbaum expects more than 8,000 players to participate in the event.

The casino also temporarily transferred its live poker tables from the casino floor to the Rio Pavilion in the back of the World Series room to take advantage of interest by players and fans.

Greenbaum said the tables have been filled during the World Series.

"You get players from the general public and professionals who have busted out in an event and still want to play," Greenbaum said. "Let's just say there's a demand for those tables."

But that wasn't always the case in Nevada.

In May, 906 poker tables throughout the state generated almost $13.3 million in gaming revenues, the Gaming Control Board reports. As a comparison, there were 443 poker tables in Nevada in May 1997, generating almost $5.5 million in gaming revenue.

During the past nine years, casinos routinely closed poker rooms for lack of interest. But the tables reopened when poker found its way to cable television. From May 2003 to May 2004, the number of live poker tables in Nevada grew 8 percent and revenues jumped 32.6 percent. From May 2005 to May of this year, Nevada poker tables generated $152 million in revenue, a 32.8 percent increase from $114.5 million in the similar 12-month period a year earlier.

"You can see where the boom started. The World Poker Tour went on television (in 2003) and interest in the game went up," said Frank Streshley, the control board's senior research analyst. "Poker managers began noticing the trend."

So did Loveman.

Harrah's interest in poker began when the company spent $1.4 billion in 2003 to buy Horseshoe Gaming, a Midwestern riverboat casino operation owned by Binion family member Jack Binion. The oldest son of gaming pioneer and World Series of Poker founder Benny Binion, Jack Binion had sold most of his stake in the family's downtown Binion's Horseshoe casino to his sister Becky Binion Behnen in 1998.

In January 2004, the financially troubled Fremont Street casino was closed by U.S. Marshals. Harrah's stepped in and bought both the casino and the rights to the World Series of Poker for $50 million. Harrah's sold the casino to MTR Gaming Group for $20 million, but kept the Horseshoe name and the tournament.

"We knew we had lightning in a bottle with this brand and poker's popularity on television only increased that popularity," Loveman said.

Harrah's ran the World Series of Poker at Binion's in the spring of 2004 and the event's popularity soared with average fans. Nashville, Tenn., accountant Chris Moneymaker, an Internet poker player, won the world championship and $2.5 million, sending interest in the game into orbit.

Harrah's has capitalized. A new contract with ESPN to televise World Series of Poker events through 2010 and sponsorships with Miller Brewing Co., Card Player Magazine, Glu Mobile, America Online, and Activision, have made the tournament akin to a professional sports league.

Harrah's is also working with WMS Gaming to produce a line of World Series of Poker slot machines.

"The reason this brand has become so important is timing and doing the right thing with it," Lerner said. "Harrah's has exploited the right mediums and have brought the event along through the right channels. Harrah's has done a brilliant job with this brand."