Californians lose to Harrah's

The California Public Employees Retirement System (CalPERS) has a 10% stake in the private equity firm Apollo Management which owns most of Harrah's Entertainment. CalPERS also shelled out close to $4 billion to keep Apollo above water like a floating craps game. Harrah's was bought at its high before the financial collapse, leading Apollo's CEO Leon Black to seek new investors. Private investors were not willing to invest while CalPERS plunged in due to double digit returns from Black's magic touch. The Chief Investment Officer of CalPERS, Joseph Dear, decided to up the ante of the Alternate Investment Program to 14% of the $200 billion retirement fund. It is possible that California is chasing good money after bad money with Black's prior controversial history with Michael Milken. It's a crapshoot.

Harrah's has pulled in its horns by offering 6:5 blackjack, lower video poker payouts, and less comps. A glass of wine at the Paris restaurant bar in Las Vegas costs $15! Harrah's is known as the "Evil Empire" on blackjack newsgroups such as blackjackinfo.com and bj21.com message boards because of its tight games. But for California to survive, more gamblers must play or stay at Harrah's properties to get out of this mess. Harrah's should use the Steve Wynn or MGM Mirage's business model by offering looser blackjack games that pay 3:2 blackjacks, stand on soft 17, late surrender, and resplit aces.

California can get out of this jam by cashing out and securing all of its retirement funds in United States Treasury bonds. It seems conservative, but an old saying professes, "light gains make heavy purses."

Full article with links at http://www.examiner.com/x-18051-San...iner~y2009m10d24-Californians-lose-to-Harrahs

J

Good one.

CP

Yes, that would be great if one chooses to ignore the fact that both
Wynns and MGMs stock has been devastated over the last few years.
Wynn was at about $160 and is now at $62. MGM was over $100 and is now at $11.
Whats a glass of wine at Wynn run? You'd be lucky to get a decent glass for $15 at Craftsteak in Mandalay.

Don't forget that a casino's overhead and labor costs dwarf everything else on its balance sheet. You don't really believe that MGM's stock would rise if they started hitting soft 17, do you?

The typical casino patron brings an amount of money to the casino that he intends to lose and plays until he loses, and what matters is if he remembers it as a good time or a bad time. And the way he plays blackjack the rules aren't going to matter very much. Probably good beverage service will increase his appreciation of the casino more than late surrender will. What the bad rules do is turn off a certain class of old time gambler who would tell you to go screw if you offered him a 6:5 game, but Harrah's has decided they can live without those guys and concentrate instead on the bus patrons.

One thing that I'm sure is happening is that when a civilian has a lousy time at a lousy game, he attributes it to "blackjack" or "gambling" or "Las Vegas" and not "the dealer at this table shortchanged me every time I got a blackjack." A ploppy doesn't recognize the importance of rules and isn't sure who owns what casino, and might no even realize that different casinos and different tables within a casino have different rules. But what he does remember is that he lost all his money on the first day of a 3-day trip and that poisons the business environment even for casinos that don't deal 6:5.

Apples to oranges shadroch, Harrah's would have probably filed for bankrupcy if it were trading publicly on the NYSE with its debt load. The bailout from the country's largest pension fund saved Harrah's from destruction. Wynn and MGM Mirage are publicly traded and have weathered the storm so far. Steve Wynn brags that his company is flush with cash while MGM is awaiting the City Center opening in December to position itself better.

I hesitated before writing about the $15 glass of wine, but the shock of the price of house wine floored me. A bar at Caesars Palace also charged $15.

The bashing of Harrah's as the "Evil Empire" here at bjinfo hasn't helped business there also.

Harrahs filing for bankruptcy? I'm not sure what you use for sources, but Harrahs is expanding. They are buying racetracks in Illinois, they just purchased a large chunk of Planet Hos debt and are looking at several other properties.
I think you give way to much credit to the forum here. What percentage of Harrahs income do you think is derived from the game of BJ? I'd guess it's less than 2%.

If City Center fails, MGM would be forced to reign in its horns by offering more 6:5 blackjack to keep itself solvent.

How many hands of 6-5 BJ will it take to save a casino a billion dollars?

Harrah's lost $1.6 billion according to the Associated Press (10/27/09) (Dead link: http://www.google.com/hostednews/ap/article/ALeqM5ipdfHFEPmMcQeDUR_Zm4w7YS708AD9BJL3SG2) in the 3rd quarter of 2009 and that's with 6:5 blackjack at many of its properties. Harrah's is rearranging the chairs of the Titanic with layoffs and Apollo's bond maturity dates being changed. California's taxpayers will be left holding the bag soon, while Apollo Management's CEO Leon Black prospers again.

Your joking of course

At the top at MGM, Harrahs and everywhere else, the big wig in charge does not sit at his desk one day and get the bright idea that hey if we start dealing 6/5 10 deck shoes all of our financial problems will disappear overnight.
Corporate life is not that simple and increased blackjack profits are no more than a minor drop in the buckett for these big casino corporations also.

What happens is the top executive passes the pressure to increase the take on down the food chain. Eventually it hits the casino managers who throw that pressure on their slot and table game managers to increase profits. (The marketing manager is charged with somehow getting more butts in the door while perhaps offering them less in real comps)
The slot managers job is the easiest because besides the VP paytables that some players actually can read, his biggest increases to the profit possibilities are on the slots where the payout percentage can be decreased drastically and hidden from the public completely.

The table manager's changes will be noticed by educated and even semi-educated players. Adding extra decks, changing rules concerning splits, doubles etc, going from S-17 to hit, and changing from 3/2 to 6/5 will all be seen by even a decent percentage of ploppies and as a general rule the more the ploppy tends to bet the greater the chance he will notice the changes.

The increase to blackjack profits, if there is even an increase, will come from less players losing money quicker. Perhaps more money will be made because the casino can cut some employees because they will need less tables/pits opened on many shifts, but the key is that blackjack profits or lack of will in no way be significant but the table game manager must show his boss that he is trying.

ihate17

WYNN
MGM
LVS

have been the only gambling relating thing I've made money on over the past 9 months. Got WYNN at 30, MGM at 7.50 and LVS at 10.00.

They're all still garbage on paper, but 2-3 years from now at least 2 of those 3 will still be more than standing. I'm banking on MGM coming out fine, even if there are 2 more shaky years ahead.

If I had been more ambitious with investing MGM and LVS hit lows around $2, WYNN $16.