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September 2, 2014

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Gaming Commission: With Planet Hollywood, is Harrah’s too big?

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Steve Marcus

Caesars Entertainment properties in Las Vegas are Paris, shown in the background, as well as Bally’s, Bill’s, Flamingo, O’Sheas, Imperial Palace, Caesars Palace, Rio, Harrah’s and Planet Hollywood.

Beyond the Sun

CARSON CITY – While unanimously approving the takeover of Planet Hollywood, the Nevada Gaming Commission today questioned whether Harrah’s is becoming too big in the Las Vegas market.

Harrah’s will now have nine casinos with an estimated 25,000 employees, or about 20 percent of the workforce in the industry in Southern Nevada. (MGM Mirage remains the state's largest gaming company. The company has 12 casinos in Southern Nevada, 10 of them, including its half-owned Aria at CityCenter, on the Las Vegas Strip. The company employs about 53,000 workers in Southern Nevada.)

Commission Chairman Peter Bernhard cited a law enacted when Howard Hughes bought a slew of casinos on the Strip that would guard against a monopoly. He wondered if there would be a “negative impact on the market share.”

Attorney Dennis Gallagher said Harrah’s has a number of national contracts with suppliers in an effort to get the best prices. But each casino has the ability to make a decision on a particular contract if it thinks it can receive a better deal, he said.

Marilyn Winn, who is president of Bally's and Paris Las Vegas for Harrah’s, will become president at the financially distressed Planet Hollywood. She said employees won't have to be rehired or take another drug test to stay on the job.

There are 2,300 employees at Planet Hollywood. She said she would be posting 40 available jobs at the resort.

Planet Hollywood would be placed between Caesars Palace and Harrah's Las Vegas in pricing and customer appeal, she said. She added that the Miss America pageant will continue to be staged at Planet Hollywood.

The commission was also concerned today about the conduct at Prive, which is operated by another company under a lease. Planet Hollywood was fined $500,000 last summer for problems associated with the nightclub that included serving minors, fighting and lewd and sexual conduct.

Winn said it was reviewing the incidents and Harrah’s would “ensure it was run with security. We are aware of the prior situation,” she told the commission.

Commissioner John Moran questioned why in these troubled economic times, Harrah's wanted to acquire the property.

Jonathan Halkyard, senior vice president and chief financial officer for Harrah’s, said it acquired $300 million in debt for $70 million. There is still a $500 million mortgage on the property but he expects to meet the annual payments.

Halkyard called Planet Hollywood a “complement to (its) Las Vegas properties.” He said Harrah’s improved business at Caesars Palace, the Flamingo and Imperial Palace after it took them over. He told the commission he thought Planet Hollywood could be marketed more effectively.

Bernhard told Harrah’s officials he had seen “many transformations” of this hotel-casino since it opened as the Tally Ho. But this venture, he said, has “the greatest chance of success.”

In another application, the commission approved Steven Spickler to become the sole proprietor of Legends Casino in Las Vegas. It is presently in bankruptcy, but Spickler told the commission he hoped to have it clear by the end of the year.

It now has 30 slot machines but Spickler says he may have authority for 35 machines. “We expect a good year,” he said.

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