Harrah's Optimistic on Fourth Vegas Property

Harrah's Entertainment Inc.'s top executive today said prospects for opening a fourth hotel-casino in Las Vegas using the "Horseshoe" brand look good and that the company is "taking a look at growth prospects for Las Vegas."

During a conference call to discuss the company's first-quarter results, Chief Executive Officer Gary Loveman said the company is exploring a development in Las Vegas given the city's strong performance and a presence on the Strip that is "modest" compared to some of its major competitors. Loveman declined to speculate further on the potential resort, adding, "we're still figuring it out."

In Las Vegas, Harrah's owns the Harrah's resort on the Strip and the nearby but off-Strip Rio; and is operating the historic downtown Binion's Horseshoe.

Officials also said the company is anticipating Thursday's kickoff of the 35th annual World Series of Poker at Binion's, a downtown Las Vegas property it's running separately from a deal to buy riverboat casino company Horseshoe Gaming Holding Corp. The World Series of Poker is the world's largest poker tournament.

Performance at the downtown Horseshoe is "in line with expectations" but the property's small size means it won't have much effect on overall company profit, officials said. Meanwhile, the acquisition of Horseshoe Gaming is progressing after the company forwarded more information recently to the Federal Trade Commission, which is investigating the purchase, they said.

Loveman said the company -- which operates casinos in more states nationwide than any other gaming giant -- also is optimistic on the spread of legalized gambling.

"Over time, despite fits and starts in certain states, the general direction is very positive for Harrah's," Loveman said. "Legislative debates (in recent months) largely focused on gaming expansion rather than (casino) taxation." States now considering new forms of gambling include Texas and Nebraska. Nebraska looks like a "close call" compared to Texas, which is less likely to pass casino legislation, Loveman said.

Harrah's today said first-quarter profit rose less than 1 percent, boosted by increased demand in Las Vegas and Atlantic City.

Net income rose to $81.7 million, or 73 cents a share, from $81.1 million, or 74 cents a share a year earlier. Revenue rose 4.7 percent to $1.1 billion, the Las Vegas-based company reported today. The company had more shares outstanding at the end of the first quarter than a year ago.

Revenue rose 10 percent at the company's Western casinos, including the Rio in Las Vegas, as more gamblers visited that market, while profit fell in the Midwest. Profit rose at Showboat casino in Atlantic City after the company added a new hotel tower there last year. Chief Executive Gary Loveman may expand further in Atlantic City as that market attracts more visitors, investors said.

Shares of Harrah's fell 55 cents to $55.70 in New York Stock Exchange composite trading Tuesday and have risen 12 percent this year. The stock fell again this morning, trading at $54.56, down $1.14.

Harrah's reported adjusted earnings per share of 76 cents. On that basis, which isn't in accordance with generally accepted accounting principles, the company exceeded the 66 cents average estimate of 22 analysts polled by Thomson Financial.

"Strong same-store sales growth fueled by enhancements added last year to our Total Rewards customer-loyalty program accelerated the positive momentum we developed in the fourth quarter of 2003," said Gary Loveman, Harrah's chief executive officer. "As a result, net income exceeded that of the 2003 first quarter despite the impact of gaming- tax rate increases imposed in mid-2003 in several states."

"We benefited from increased revenues in all segments, ranging from rated retail customers who typically spend $50 or less per visit to VIP customers who spend $400 or more per visit," Loveman said.