Harrahs Dealing With Challenging Economic Conditions'

Published on: May 11, 2008 

The current economic crisis in the United States is hitting the usually recession proof gambling industry hard.  Harrah’s Entertainment, Inc., the world’s largest gambling company is feeling it badly with their first quarter numbers coming in to show a net loss of $187.8 million thanks to what they have referred to as ‘challenging economic conditions’ and costs that are associated with the company going private.  It was bought by Apollo Global Management LLC and TGP Capital LP in January 2008 and the companies refrained from divulging the shareholder’s earnings.

"Our first quarter results reflect the consequences of challenging economic conditions," Harrah's President and Chief Executive Gary Loveman stated.  The company who is sitting well as of March 31, 2008, plans to reduce expenses further to meet what Loveman is referring to as a ‘softness’ in the gambling market.  They recently closed their buffet at the Las Vegas Bally’s which caused a layoff of 100 employees.  An additional 1,000 jobs are still unfilled as an attempt to reduce more costs after employees voluntarily left their positions in the Las Vegas casinos owned by Harrah’s, reducing their operating staff to about 25,000.

Unfortunately, Harrah’s is not alone.  MGM Mirage is another Las Vegas casino owner who has been facing the same economic pressures as Harrah’s.  They laid off 400 midlevel employees in April across all of their holdings – not just in Las Vegas properties – after their first quarter numbers showed a 30 percent drop in profits.  Las Vegas Sands Corporation has also posted a significant first quarter loss although they have not released how much, and Wynn Resorts Ltd. has also shown a first quarter drop in profits of 20 percent.

"We're seeing softness across the board," Loveman stated during a conference call with the media, "but much less so at the upper end. It is in many instances folks coming and playing at lower levels."  The new tower that was opened at the Harrah’s Atlantic City establishment did help boost the first quarter numbers a little bit, and Loveman is hoping that it will help boost the next quarter’s profits as summer moves in.  The Horseshoe Hammond casino and resort in Indiana is scheduled to open later this year to a tune of $485 million, and there is an expansion scheduled to be completed in 2009 at Caesars Palace in Las Vegas.  Harrah’s is planning on changing its name to Caesars Entertainment Corporation as soon as they get regulatory approval.  Whether or not the expansions and name changes will help boost profits remains to be seen.

Other Recent News:
News Archives
2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007
Casino Offers