Author Home Author Archives Search Articles Subscribe
Stay informed with the
NEW Casino City Times newsletter!
Newsletter Signup
Stay informed with the
NEW Casino City Times newsletter!
Related Links
Related News
Recent Articles
Rod Smith

FTC Places Merger on Hold; More Data Sought From Harrah's, Horseshoe Gaming

10 November 2003

Harrah's Entertainment and Horseshoe Gaming Holding Corp. announced Friday their proposed, $1.4 billion merger is on hold indefinitely because of federal concerns about anticompetitive effects of the buyout.

The Federal Trade Commission has demanded added information from both companies to assure compliance with the Hart-Scott-Rodino Antitrust Improvement Act of 1976.

The immediate effect of the FTC demand on Wednesday for more information was to extend the waiting period imposed by the antitrust law until 30 days after Harrah's and Horseshoe have complied with the request.

Harrah's spokesman David Strow declined to comment on how long it would take the companies to comply with the FTC request.

Horseshoe Gaming spokesman Kurt Saylor was traveling and could not be reached for comment. Federal officials also declined to comment on the pending merger.

Capitol Hill sources, asking not be be named, however, said such delays and requests for information generally indicate concerns about the anticompetitive effects, or the increased market concentration ratios, caused by mergers.

Concentration ratios are used to measure the market share of companies in specific industries in specific markets.

Wall Street sources said market control issues likely were being raised about combined operations in Illinois and Louisiana if the merger takes place.

"Concentration in markets such as Chicagoland where Harrah's would have two of four properties and in Louisiana if it is unable to sell Harrah's Shreveport seems to be the issue," said Deutsche Bank analyst Marc Falcone.

"It shouldn't really be an issue in the long run," he said.

However, Falcone said in the Chicago area, Harrah's already operates two of four casinos: Harrah's East Chicago with 1,900 slot machines and 293 rooms and Harrah's Joliet with 1,100 slot machines and 204 rooms.

Also in Chicagoland, Horseshoe Gaming operates Horseshoe Hammond with more than 2,000 slot machines, which would be acquired by Harrah's under the terms of the merger agreement.

In Louisiana, Horseshoe Gaming operates Horseshoe Casino & Hotel Bossier City with 1,600 slot machines and 606 rooms and Horseshoe Tunica with 2,000 slots and 500 hotel rooms.

Harrah's operates Harrah's Shreveport with more than 1,100 slot machines and 514 rooms, as well as Harrah's New Orleans, Harrah's Casino Lake Charles and Louisiana Downs in Bossier City, La.

Harrah's previously announced that it intended to sell Harrah's Shreveport to assure compliance with antitrust regulations although company President Gary Loveman recently said no deal had been finalized.

"We are (still) talking with several potential buyers at this time. We're actively in talks, but we don't have any potential transactions to report at this time," Strow said.

He also said the company does not intend to sell off any of its Illinois operations "at this time," including its two casinos in the Chicago area.

Capitol Hill sources also said the merger, which will have to be approved by both the FTC and the Department of Justice, could also have been slowed down by Bush administration concerns about the gaming industry.

University of Nevada, Las Vegas professor and gaming industry expert Bill Thompson said Louisiana, and possibly Illinois, may raise larger issues for federal agencies.

"Louisiana is going to be a problem all the way around for our industry for many years to come," he said.

"Our industry went into a market that was fundamentally corrupt. The (former Gov. Edwin) Edwards legacy (of corruption) lives on, and I don't know how much you can distance yourself from it. And there may be the same style of politics in Illinois," Thompson said.

When it closes, the Harrah's-Horseshoe deal would rank behind MGM Grand's $6.4 billion purchase of Mirage Resorts in 2000 and Park Place Entertainment's $3 billion purchase of Caesars World in 1999. It would also be Harrah's fifth major casino purchase since 1998, when it began its buying spree with the purchase of the Showboat for $550 million. Harrah's also bought the Rio for $888 million in 1999, Players International for $425 million in 2000 and Harveys Casino Resorts for $675 million in 2001.

Falcone said the Harveys' acquisition also was delayed by FTC concerns over compliance with Hart-Scott-Rodino, but it nevertheless was ultimately consummated.

FTC Places Merger on Hold; More Data Sought From Harrah's, Horseshoe Gaming is republished from