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April 18, 2014

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looking in on: gaming :

Harrah’s still wants arena, but how much will it pay?

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LEILA NAVIDI / LAS VEGAS SUN FILE

Harrah’s originally intended to its contribution to a sports arena project to be this land behind Bally’s and Paris. It’s now talking about sharing costs.

Several news reports over the past week indicated Harrah’s Entertainment had given up on building a sports and entertainment arena behind its Paris Las Vegas and Bally’s casinos with Anschutz Entertainment Group.

Though Harrah’s may be no closer to developing the stadium today than it was when it announced the project more than a year ago, the company hasn’t scuttled those plans.

“Nothing has changed,” Harrah’s spokeswoman Jacqueline Peterson said.

When the companies jointly announced the arena in August 2007, the relationship was widely believed to be a true partnership, in which the parties would split the cost. Harrah’s did little to clarify that, in fact, the company was offering land for the stadium. Whether the company would have a larger financial role in developing it was part of negotiations that are, according to the company, ongoing.

Harrah’s would be thrilled if AEG were able to raise $500 million to build a 20,000-seat arena that could draw more tourists to the intersection where the company’s properties are heavily concentrated.

Even if Anschutz had the money, building a stadium without having a major league sports team — and amid an economic downturn, no less — might not be prudent.

The stadium plan, however, is a well-vetted concept that has passed muster with the executive office.

Caesars Entertainment, acquired by Harrah’s in 2005, had planned to build a 40,000-seat, retractable-roof stadium at the same site that would house a baseball team. The buyout stalled plans for the $420 million stadium. That was before the chief hope for the stadium, the Montreal Expos, moved from Montreal to Washington, D.C. instead.

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Word is that CityCenter’s Aria, Mandarin and Harmon hotel rooms will offer the latest in-room technology, including televisions that offer customized, time-of-day settings that open and close curtains, move temperature dials, turn lights off and on and play certain styles of music at preset volumes.

Sounds cool, for sure.

Even better are promises that the remotes controlling all room settings are networked so employees are red-flagged to replace dying batteries and that room cards will always work. Oh, and no more need to mess with alarm clocks or those pesky “do not disturb” signs that are always falling off door handles. Digital notifications are automatic on “goodnight” settings.

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The decision to add or remove participation slot machines from casinos may come down to the peculiarities of a company’s accounting department rather than the fickle preferences of gamblers.

Participation games, which pool wagers from hundreds of players, usually have popular brand names and typically offer bigger jackpots than other games.

With gaming companies tightening expenses where they can, you can bet they are examining each line item closely.

Participation games are believed to be more expensive for casinos because casinos receive only a fraction of the machines’ income. But the equation isn’t that simple. The tradeoffs — not having to buy or service the machines, for example — can offset both real and perceived drawbacks.

The difference between buying a slot machine outright and leasing it from a manufacturer, which is the case with participation slots, is a much more complicated scenario than say, buying or leasing a car. And yet, some of the same factors are in play. Sometimes buying makes sense because a company can spread out the expense over time and write down depreciation. That can boost a company’s earnings before certain items are deducted.

Leases also make sense, too. They allow companies to spend less money up front. But there’s a downside. Although operating leases don’t show up on a company’s balance sheet, they cut into earnings because they are treated as operating expenses.

So, if you can’t find that Wheel of Fortune slot machine, you can complain to management.

Or the accounting department.

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