After sitting on the sidelines while two of its biggest rivals decided to team up, Harrah's Entertainment Inc. wants to double down on the gambling business by purchasing Caesars Entertainment Inc.
The purchase would create the world's largest gambling enterprise, eclipsing the proposed $4.8-billion acquisition of Mandalay Resort Group by Los Angeles billionaire Kirk Kerkorian's MGM Mirage, a deal announced a month ago.
For The Record
Los Angeles Times Friday July 16, 2004 Home Edition Main News Part A Page 2 National Desk 1 inches; 27 words Type of Material: Correction
Harrah's-Caesars deal -- A map accompanying an article about Harrah's Entertainment Inc.'s bid to acquire Caesars Entertainment Inc. in Thursday's Section A had Iowa labeled as Indiana.
The boards of both Harrah's and Caesars approved the deal Wednesday evening, according to a source familiar with the talks. The companies are expected to announce today the roughly $9.5-billion purchase, which includes the assumption of debt.
If the deal passes the scrutiny of federal and state regulators, the combined business would control about 20% of the Las Vegas Strip, including six major properties -- Caesars Palace, Paris Las Vegas, the Flamingo, Bally's, Harrah's and the nearby Rio -- that boast nearly 17,000 hotel rooms, 9,200 slot machines and more than 500 table games.
That would speed the transition of the Las Vegas Strip from a hotly competitive market into one in which just two large companies control a large majority of the rooms, tables and machines.
"There will be two behemoths," said Hal Rothman, a chronicler of Las Vegas history and professor at the University of Nevada, Las Vegas. "This is an industry that has become so big and important, players are getting swept off the board."
The consolidation in the casino industry reflects the desire by giant corporations to take advantage of what may be the nation's strongest tourism and convention market.
"Las Vegas is hot. You see it in virtually every element of the business," said Patty Wright, an industry analyst with Fitch Ratings in New York.
After suffering a nose dive in visitors in the months following the Sept. 11 terrorist attacks in 2001, Las Vegas has roared back, its image honed by its erotically suggestive "What happens here, stays here" advertising campaign.
Popular television shows such as "Las Vegas," the NBC drama series that chronicles the sex lives and work lives of a fictional casino's staff, and the Fox unscripted show "The Casino," set at the Golden Nugget in downtown Las Vegas, have burnished the luster. Beyond that, three networks -- ESPN, Bravo and the Travel Channel -- are broadcasting Vegas poker tournaments.
