Skip to main content
Select Source:

Harrah’s Entertainment, Inc.

Harrahs Entertainment, Inc.

1023 Cherry Road
Memphis, Tennessee 38117-5423
U.S.A.
Telephone: (901) 762-8600
Toll Free: (800) eHARRAH
Fax: (901) 762-8637
Web site:http://www.harrahs.com

Public Company
Incorporated: 1971 as Harrahs
Employees: 40,000
Sales: $3.5 billion (2000)
Stock Exchanges: New York
Ticker Symbol: HET
NAIC: 72112 Casino Hotels; 71321 Casinos

Tracing its roots to a small Reno bingo parlor, Harrahs Entertainment, Inc. is one of the most recognized names in the casino gaming business. Operating under the Harrahs, Rio, and Showboat brand names, Harrahs maintains casinos in markets across the United States. Harrahs prides itself in providing excellent customer service and in bringing technological innovation to the gaming industry. Instead of building new hotel-casino complexes like many of its competitors, Harrahs has concentrated on a successful strategy of brand identification and a customer rewards program that helps drive business to Harrahs casinos across the country.

The Early Years

William Fisk Harrah was the son of a Venice, California, lawyer and real estate operator who also had served as mayor of this seaside community. The senior Harrah went bankrupt during the Depression and was left with only one asset: a leased building on the honky-tonk Venice pier jutting into the Pacific Ocean. Here he operated a nickel-and-dime game of dubious legality, loosely based on bingo, in which players sat in a circle and rolled marbles toward a number. After Bill Harrah was caught cheating on a college chemistry exam in 1930, he went to work running the game and soon concluded he could do better than his father, who sold it to him for $500. He got rid of the shills his father had hired, refurbished the premises, and grossed as much as $50,000 a year.

In the wake of a state crackdown on gambling, Harrah moved in 1937 to Reno, Nevada, where gambling had been legalized six years earlier. There he bought a bingo parlor that was located too far from the action and failed in three months. In 1939, however, he reopened in the two-block gambling heart of Reno. Three years later he opened a casino, equipping it with a blackjack and a craps table and 20 slot machines.

The enterprise flourished during the free-spending World War II years, and in 1946 Harrahs Club opened in quarters that had been expanded by the purchase of neighboring properties. Harrah added roulette to the card and dice tables and served liquor to the players. His spotlessly clean, glass-fronted, plush-carpeted casino was a contrast to the rough frontier-type betting parlors of the time and was the first to be lined with one-way mirrors so as to oversee the dealers and cashiers handling the chips and cash. By 1948 the gross annual revenue of Harrahs Club was more than $1.5 million and its net profit, after taxes, was about $100,000. This was just the start, for when Harrah swore off alcohol in 1952 (after almost losing his life driving while drunk), he turned his attention from hell-raising to a more highly focused passion for profit.

The Reno and Lake Tahoe Casino-Hotels, 1955-70

In 1955 Harrah bought a dingy casinohoused in a Quonset huton the southern shore of Lake Tahoe, just east of the California state line, for $500,000. He built a false front around it and reopened it as Harrahs Tahoe. Four years later he relocated the casino across the highway, in the worlds largest single structure devoted to gambling. The new casino was a highly integrated operation that included a ten-acre parking lot and an 850-seat theater-restaurant stocked with star entertainers. Blizzards habitually buried the area each winter, but Harrah assembled a fleet of snowplows to clear the mountain roads, which were doubled in width at his own expense. Not averse to the low-budget trade, he established a vast bus network to bring in customers from 31 California cities and even opened a child-care center for gambling parents to park their offspring. The Lake Tahoe casino was said to have turned a profit of more than $1 million in its first year.

The annual gross from Harrahs two casinos was estimated at $40 million in 1961, and four years later William Harrah was described as the worlds biggest gambling operator. With 2,500 employees, he was the largest employer in Nevada except for the Atomic Energy Commission. A lover of fast cars, he established Rolls Royce, Ferrari, and Jeep dealerships and assembled the worlds largest automobile collection, which the Internal Revenue Service allowed him to write off as a business expense.

With both his casinos booming and no inclination to take on the competition in Las Vegas, Harrah next turned to the hotel business. He constructed the highest building in Reno, a 24-story hotel across the street from his casino. Completed in 1968, it cost about $7 million. Next he erected a luxurious 18-story hotel, which opened in 1973, on his Lake Tahoe property. Every room came with a view of the lake and two marble-finished bathrooms.

Public Company in the 1970s

In part to finance these ventures and support his lifestyle (he was married six times), Harrah took his company public in 1971, raising $4 million after taxes and expenses by offering 13 percent of the stock at $16 per share. No Wall Street firm would handle the offering, but it was oversubscribed, and within a year the stock had soared to $71 per share. Overcoming the financial sectors misgivings about the gambling industry, Harrahs became, in 1973, the first casino company listed on the New York Stock Exchange.

Harrahs net sales increased from $77.9 million in 1970 to $195.6 million in 1979, and net income grew from a low of $4.3 million in 1971 to a record $16.9 million in 1978. One securities analyst called Harrahs the most tightly controlled and best-managed casino company in the world. Its two casinos, operating around-the-clock every day of the year, accounted for about 10 percent of Nevadas gambling volume. Games of chance now included baccarat, poker, and keno, as well as the roulette, blackjack, craps, and bingo tables and 3,733 slot machines. The 1,600 seats at the theater-restaurants in Reno and Lake Tahoe were filled nearly every night. The two hotels enjoyed a 92 percent occupancy rate. Nearly 250,000 customers came every year by bus, leading Harrahs president to acknowledge, We are the Safeway of the industry.

By the late 1970s, however, Harrahs was beginning to encounter difficulties from the opening of competing hotel-casinos in Reno and environmental constraints on further development in the Lake Tahoe area. The company scrapped plans to open a new Reno hotel-casino just across the street from the existing one and a combination hotel-casino and theme park just outside the city. When Harrah died in 1978, he left his heirs almost six million shares of stock in his company, but no cash to pay estate taxes of $35 million or a $13 million debt to a Reno bank.

Holiday Inns Subsidiary in the 1980s

At this point a buyer for Harrahs emerged in the unlikely form of family-oriented Holiday Inns, Inc., a Memphis-based company previously run by pious Baptists opposed to gambling. Even before Harrahs death, however, Holiday Inns executive Michael Rose was seeking his participation in a joint venture in Atlantic City, New Jersey, where gambling had been legalized in 1977. The company bought, in 1979, a stake in a casino adjacent to the Holiday Inn on the Las Vegas Strip. It was renamed Holiday Casino and, later, Harrahs Las Vegas. Holiday Inns also announced plans to build two casino-hotels in Atlantic City. In February 1980 the company acquired Harrahs, which was still about 70 percent owned by William Harrahs estate, for $310 million in cash and notes. Rose, who became chief executive officer of Holiday Inns the next year, sold most of Harrahs 1,400 automobiles for $100 million and gave the rest to a Reno museum.

Now a wholly owned subsidiary of Holiday Inns, Harrahs became the operator of a casino opened in 1980 on marshland a mile and a half north of Atlantic Citys boardwalk and named Harrahs Marina Hotel Casino. It had 506 guest rooms, a casino with capacity for 6,300 patrons, and an array of other spaces, including restaurants and bars, a Broadway-sized theater, conference and meeting rooms, a high-rise garage for 2,100 cars, and a fun center for children and teenagers. A 264-suite tower was added later. Harrahs Marina (later renamed Harrahs Atlantic City) proved to be the most consistently profitable casino in Atlantic City. In 1985, for example, the facility earned $48.8 million before taxes, by far the best performance of any of the 11 Atlantic City casinos.

In 1984, Harrahs opened, in partnership with real estate developer Donald J.Trump, the tallest building on the Atlantic City boardwalk, the 39-story Harrahs Trump Plaza hotel and casino. The joint venture, built by the Trump Organization on Trump land but with Harrahs money, collapsed in acrimony when the competing Trumps Castle made its debut the following year right across the street from Harrahs Marina. In 1986 Trump bought Harrahs half-share in Trump Plaza (Harrahs name had been removed) for $59.1 million.

Company Perspectives:

The vision of Harrah s Entertainment is to offer exciting environments and to become legendary at creating smiles, laughter, and lasting memories with every guest we entertain. The companys mission is to build lasting relationships and create a great time, every time guaranteed by delivering comfort, action, a shot to win, and hospitality (C.A.S.H.) to the max through enthusiastic, highly trained, friendly, attentive and empowered employees who have pledged to provide unsurpassed entertainment and service to every guest.

Despite acrimonious ventures on the East Coast, Harrahs pursued developments out west. Harrahs opened Bills Lake Tahoe Casino in 1987 on a 2.1-acre site adjacent to Harrahs Lake Tahoe. The following year Harrahs Laughlin was opened in Laughlin, Nevada, on a natural cove on the Colorado River, with 464 hotel rooms and 26,500 square feet of casino space. Late in 1988 a second Laughlin hotel tower was completed.

Headlong Expansion in the 1990s

In 1989 Holiday Corp., formerly Holiday Inns, became the Promus Cos., Inc., The following year Rose sold the Holiday Inns hotel chain to Bass PLC of Great Britain for $2.23 billion. Holiday shares were then converted, on a one-for-one basis, to Promus shares, with Holidays Embassy Suites, Hampton Inn, and Homewood Suites hotel divisions remaining as Promus units. Harrahs continued to thrive as the companys casino-entertainment division and in 1991 relocated its headquarters from Reno to Memphis, Tennessee.

Casino gambling had been legal only in Nevada and New Jersey until 1989, but between 1989 and 1996 it was legalized in some form in 21 additional states. In 1993 Harrahs established a new division for riverboat casinos and opened the first of these facilities along the Illinois River in Joliet, Illinois. A second Joliet floating casino opened the following year. Also during 1993-95 Harrahs established riverboat casinos along the Mississippi River in Vicksburg and Tunica, Mississippi, the Red River at Shreveport, Louisiana, and along the Missouri River in North Kansas City, Missouri. A second Tunica riverboat opened in 1996.

Harrahs also continued to create or acquire land-based casinos in the 1990s. Eagle Gaming, L.P., one-sixth owned by Harrahs, opened casinos in the Colorado historic mining towns of Central City and Black Hawk in 1993. Harrahs managed them for a fee. In addition, in 1992 Harrahs announced the creation of a new division for casinos on Indian lands. Congress had, in 1988, passed a law legalizing games of chance on Indian reservations in any state where such games were allowed for churches, temples, and veterans and other groups. By August 1993 no less than 73 tribes in 19 states were offering or would soon be offering full-scale casino gambling. Harrahs Ak-Chin, near Phoenix, opened in December 1994. A year later the Upper Skagit Indians and Harrahs opened a casino entertainment complex about 70 miles north of Seattle.

On February 1, 1996, Harrahs celebrated the grand opening of its first international casino entertainment complex, Sky City Casino in Auckland, New Zealand. This property consisted of 45,000 square feet of casino space and was also to include a hotel, theater, and 1,076-foot tower. The company, which held a 20 percent share in the joint venture, was to manage it for a fee.

An embarrassment for Harrahs was the failure of Harrahs Casino New Orleans, which was owned by Harrahs Jazz Co., a partnership in which a subsidiary of Harrahs Entertainment held a 47-percent interest. On the edge of the French Quarter, this temporary casino (a permanent one was under construction which would open a few years later) opened in 1995 but closed in nine weeks, grossing less than half of its projected $33 million a month and causing the partnership to file for bankruptcy. Harrahs Entertainment wrote off $93.5 million of losses in the failed venture but was not responsible for Harrahs Jazz Co.s $435-million junk bond debt.

In late 1995 Harrahs and Players International, Inc. broke ground on a joint riverboat casino entertainment complex in Maryland Heights, Missouri, a suburb of St. Louis. Each company was to operate two boats, connected by a shoreside entertainment mall anchored by a 291-room hotel managed by Harrahs. During 1995 Harrahs also announced plans for major expansions of its Las Vegas and Atlantic City casino properties, including the addition of a hotel tower and additional casino space. Construction of a $78-million expansion of Harrahs North Kansas City also began that year.

Key Dates:

1937:
William Harrah moves his small-time casino operations from California to Reno, Nevada.
1946:
The posh, full-service Harrahs Club opens, the first casino in the country to use one-way mirrors to oversee dealers.
1948:
Gross annual revenue of Harrahs exceeds $1.5 million.
1955:
Harrahs Tahoe opens.
1961:
Annual gross from Harrahs two casinos is estimated at $40 million.
1971:
Harrahs goes public, offering 13 percent of the stock at $16 per share.
1973:
Harrahs becomes first casino company to be listed on the New York Stock Exchange.
1978:
William Harrah dies.
1980:
Holiday Inns, Inc. acquires Harrahs for $310 million; opens the highly successful Harrahs Marina Hotel Casino in Atlantic City.
1989:
The holding company Promus is created, which becomes the parent firm of Harrahs.
1991
Harrahs relocates headquarters from Reno to Memphis.
1993:
Harrahs establishes a riverboat casinos division, taking advantage of new forms of legalized gambling, expanding its operations into many states.
1995:
Promus divides itself into two, creating separate public corporations for its lodging and gaming operations; the latter becoming Harrahs Entertainment.
1998:
Harrahs acquires Showboat, Inc. for $1.2 billion in stock and debt; it also takes over the casino Sams Town in Missouri.
1999:
Harrahs and the Rio Hotel and Casino merge.
2000:
Harrahs completes its acquisition of Players International, Inc., acquiring three properties.
2001:
Harrahs announces plans to acquire Harveys Casino Resorts.

In 1995, the Promus Cos. divided into two separate corporations, with the casino division becoming Harrahs Entertainment, Inc. and the hotel division Promus Hotels Corp. Rose remained chairman of both companies. By the end of February 1996, Harrahs offered 16 casinos with 592,500 square feet of space, 16,377 slot machines, 898 table games, 63 restaurants, and 21,905 parking spaces. There were 5,736 hotel rooms at the end of 1995. Gaming volume came to $20.6 billion that year, compared with $8.5 billion in 1991. Harrahs long-term debt was $753.7 million in 1995.

The riverboat division was Harrahs most lucrative in 1995, accounting for 43 percent of its $354 million operating profit, followed by Atlantic City (22 percent), Southern Nevada (18 percent), and Northern Nevada (16 percent). Of Harrahs $1.55 billion in revenues that year, the riverboat operations accounted for 38 percent, followed by Atlantic City (22 percent), Northern Nevada (20 percent), and Southern Nevada (19 percent). Net income was $78.8 million.

A key marketing tool was the Harrahs Gold Card, accepted at each Harrahs property. Its database included, in 1994, 3.2 million cardholders and 3.1 million potential cardholders who had stayed at a Harrahs property or played in one of the casinos. In addition to enabling the company to follow trends in play and the popularity of certain games, the gold card was used to gather information on guests for marketing purposes and to reward them, based on volume of play.

Placing a Winning Bet at the Turn of a New Century

As the 1990s drew to a close, Las Vegas saw an unprecedented growth in billion-dollar destination properties. Opulent, themed mega-casinos such as the Venetian, Mandalay Bay, Monte Carlo, and Bellagio opened to rave reviews. But while the trend toward building big from the ground up captured the imagination of many in the gaming industry, Harrahs focused on expanding its brand identification and acquiring existing properties, big and small. In a letter to shareholders, Harrahs chairman and CEO Phillip Satre explained, building such facilities is not the most efficient method of sustaining revenue and earnings growth or return on investment because new casinos alone do not translate into long-term customer satisfaction.

So instead of expending billions to build something new, Harrahs concentrated on a buyout formula that seemed like a safe bet. In 1998 Harrahs bought Showboat, Inc. for $1.2 billion in stock and debt. It also acquired Sams Town, a struggling casino in Missouri. Then in 1999 Harrahs and the Rio Hotel and Casino merged, allowing Harrahs to align itself with one of the first large destination properties in Vegas.

With the acquisition of these properties and the continued profitable partnerships with Indian gaming casinos scattered across the country, Harrahs developed what no other gaming company had before: brand recognition. To further drive the Harrahs name into the American gaming psyche, the company launched Total Gold, building on the success of its Gold Card program. This nationwide brand loyalty program allowed gamblers to earn points by making excursions to smaller facilities, such as the riverboat casino in Joliet or East Chicago, and redeeming them as discounts on trips to Harrahs more well-known, larger properties, such as those in Vegas and Atlantic City. In April 2000, the Total Gold program became Total Rewards, an expanded three-tiered rewards system, giving Harrahs even more ways to track customers play and offer incentives.

Also aiding Harrahs brand recognition campaign was the 1999 decision by the U.S. Supreme Court to lift a ban on gambling advertising that featured people inside casinos. After the ruling, Harrahs hit the airwaves in nine cities with two ads showing the joys of playing slot machines. The spots end with the tagline, You know you gotta get to Harrahs, oh yeah. In an article for Advertising Age magazine Harrahs vice-president of brand management Amanda Totaro notes that the campaigns focus on people gambling is the result of market research data indicating that consumers visit Harrahs for the thrill of the game, regardless if they win or lose.

By the year 2000, Harrahs had grown from a single bingo parlor into a national powerhouse, operating 21 casinos in 17 U.S. markets. Moreover, half of the U.S. population now lived within a three-hour drive of a Harrahs owned or managed property. And in an industry that many characterized as mature, Harrahs continued to see increases in revenues. Company-wide revenues grew 15 percent in 2000, to $3.5 billion. Part of that growth was aided by Harrahs acquisition of Players International, Inc. in March 2000. All three of the properties were expected to assume the Harrahs name by the end of 2001. Also, in April of 2001 the company announced plans to buy Harveys Casino Resorts from Colony Capital Investors, III, L.P., for $625 million. As part of the purchase agreement, Harrahs Entertainment will acquire Harveys Resort in Lake Tahoe, Harveys Casino Hotel and Bluffs Run Casino in Council Bluffs, Iowa, and Harveys Wagon Wheel Hotel-Casino in Central City, Colorado. The Harveys properties are an excellent complement to our existing geographic network of casino locations and will allow us to further expand the revenue and earnings capabilities of our industry-leading customer-loyalty program, Total Rewards, said Phil Satre.

While overall the future looked bright for Harrahs, the company experienced some setbacks in recent years. The Las Vegas Rio property took a huge hit in payoffs made to gamblers at its table games for the year 2000. Harrahs calls this bad luck, unusually low table-game hold percentages and unsatisfactory entertainment results. Management reports that it has taken steps to correct the problem by reducing betting and credit limits. Meanwhile, Harrahs New Orleans continued to be plagued with problems in 2000 and 2001. JCC Holding Company, the casinos primary owner, filed for bankruptcy. Harrahs Entertainment owns 43 percent of JCC and is trying to reorganize the structure so the casino can remain viable. But the plan must be approved by the Louisiana legislature, which so far has not taken kindly to the Harrahs gaming presence in the Big Easy. It remains to be seen if Harrahs can beat the odds on this one.

Principal Subsidiaries

Aster Insurance Ltd. (Bermuda); Harrahs Operating Co., Inc.

Principal Competitors

MGM Mirage; Park Place Entertainment; Trump Hotels and Casinos.

Further Reading

Berger, Meyer, The Gay Gamblers of Reno, Saturday Evening Post, July 10, 1948, pp. 22-23, 74, 76, 78.

Bukro, Gary, The Christmas Tree Is in the Mail, Really, Chicago Tribune, November 23, 1995, pp. 1, 4.

Davis, Wendy, Harrahs Ads Accentuate the Positive, Advertising Age, March 19, 2001, p. 49.

Getmanikow, George, Holiday Inns Discards Family Image for Stake in Gambling Industry, Wall Street Journal, January 11, 1980, pp.1,31.

Harrahs Says It Will Acquire Harveys Casino Resorts, The New York Times, April 25, 2001, p. C4.

Hughlett, Mike, Analysts See Rosy Future for Harrahs Parent, New Orleans Times-Picayune, December 17, 1995, p. F3.

Johnston, David, Temples of Chance, New York: Doubleday, 1992.

Land, Barbara, and Myrick Land, A Short History of Reno, Reno and Las Vegas: University of Nevada Press, 1995.

Mandel, Leon, and William Fisk, Harrah, New York: Doubleday, 1982.

McDowell, Edwin, Promus Proposes to Divide Its Units into Two Companies, New York Times, January 31, 1995, pp. D1, D7.

Monroe, Keith, The New Gambling King and the Social Scientists, Harpers Magazine, January 1962, pp. 35-41.

Taking the Risk Out of Gambling, Time, November 21, 1977, p. 78.

The Big Easys Bad Bet, Fortune, December 8, 1997, p. 162.

The Last Harrah, Forbes, October 16, 1978, p. 66.

The Legacy of William Harrah, Harrahs People, Spring 1995, pp. 4-11.

The Two Faces of Bill, Forbes, July 1, 1972, pp. 39, 41.

Wernick, Robert, The Worlds Biggest Gambler, Saturday Evening Post, February 13, 1965, pp. 27-32.

Robert Halasz

update: Suzanne L. Rowe

Cite this article
Pick a style below, and copy the text for your bibliography.

  • MLA
  • Chicago
  • APA

"Harrah’s Entertainment, Inc.." International Directory of Company Histories. . Encyclopedia.com. 25 Sep. 2017 <http://www.encyclopedia.com>.

"Harrah’s Entertainment, Inc.." International Directory of Company Histories. . Encyclopedia.com. (September 25, 2017). http://www.encyclopedia.com/books/politics-and-business-magazines/harrahs-entertainment-inc

"Harrah’s Entertainment, Inc.." International Directory of Company Histories. . Retrieved September 25, 2017 from Encyclopedia.com: http://www.encyclopedia.com/books/politics-and-business-magazines/harrahs-entertainment-inc

Harrah’s Entertainment, Inc.

Harrahs Entertainment, Inc.

1023 Cherry Road
Memphis, Tennessee 38117-5423
U.S.A.
(901) 762-8600
Fax: (901) 762-8637

Public Company
Incorporated:
1971 as Harrahs
Sales: $1.55 billion (1995)
Employees: 24,825
Stock Exchanges: New York Chicago Philadelphia
Pacific
SICs: 7011 Hotels and Motels; 7999 Amusement & Recreation Services, Not Elsewhere Classified

William Harrah parlayed a Reno bingo parlor into a company, Harrahs Entertainment, Inc., consisting of Nevada casinos, hotels, and nightclubs that brought in nearly $200 million a year before his death in 1978. Harrahs later opened a casino-hotel in Atlantic City and expanded rapidly in the 1990s, as casino gambling spread to half the nations 50 states. In 1994 Harrahs Entertainment, Inc. had the largest sharenearly eight percent in the nations $14-billion-a-year casino-gambling industry, and in 1995 it was operating more casinos in more markets, 15 casinos in eight states, than any other casino company in North America. The casinos were located not only in traditional landbased venues but also on riverboats and Indian reservations. In 1996 the company opened its first overseas casino operation, a joint venture in Auckland, New Zealand. Harrahs was proceeding with expansion plans and projects in nine markets and was aiming at a goal of 30 casinos worldwide by 2000.

The Early Years

William Fisk Harrah was the son of a Venice, California lawyer and real estate operator who also had served as mayor of this seaside community. The senior Harrah went bankrupt during the Depression and was left with only one asset: a leased building on the honky-tonk Venice pier jutting into the Pacific Ocean. Here he operated a nickel-and-dime game of dubious legality, loosely based on bingo, in which players sat in a circle and rolled marbles toward a number. After Bill Harrah was caught cheating on a college chemistry exam in 1930 he went to work running the game and soon concluded he could do better than his father, who sold it to him for $500. He got rid of the shills his father had hired, refurbished the premises, and grossed as much as $50,000 a year.

In the wake of a state crackdown on gambling, Harrah moved in 1937 to Reno in Nevada, which had legalized gambling six years earlier. There he bought a bingo parlor that was located too far from the action and failed in three months. In 1939, however, he reopened in the two-block gambling heart of Reno. Three years later he opened a casino, equipping it with a blackjack and a craps table and 20 slot machines.

The enterprise flourished during the free-spending World War II years, and in 1946 Harrahs Club opened in quarters that had been expanded by the purchase of neighboring properties. Harrah added roulette to the card and dice tables and served liquor to the players. His spotlessly clean, glass-fronted, plushcarpeted casino was a contrast to the rough frontier-type betting parlors of the time and was the first to be lined with one-way mirrors so as to oversee the dealers and cashiers handling the chips and cash. By 1948 the gross annual revenue of Harrahs Club was more than $1.5 million and its net profit, after taxes, was about $100,000. This was just the start, for when Harrah swore off alcohol in 1952 (after almost losing his life driving while drunk), he turned his attention from hell-raising to a more highly focused passion for profit.

The Reno and Lake Tahoe Casino-Hotels, 1955-1970

In 1955 Harrah bought a dingy casinohoused in a quonset huton the southern shore of Lake Tahoe, just east of the California state line, for $500,000. He built a false front around it and reopened it as Harrahs Tahoe. Four years later he relocated the casino across the highway, in the worlds largest single structure devoted to gambling. The new casino was a highly integrated operation that included a ten-acre parking lot and an 850-seat theater-restaurant stocked with star entertainers. Blizzards habitually buried the area each winter, but Harrah assembled a fleet of snowplows to clear the mountain roads, which were doubled in width at his own expense. Not averse to the low-budget trade, he established a vast bus network to bring in customers from 31 California cities and even opened a child-care center for gambling parents to park their offspring. The Lake Tahoe casino was said to have turned a profit of more than $1 million in its first year.

The annual gross from Harrahs two casinos was estimated at $40 million in 1961, and four years later William Harrah was described as the worlds biggest gambling operator. With 2,500 employees, he was the largest employer in Nevada except for the Atomic Energy Commission. A lover of fast cars, he established Rolls Royce, Ferrari, and Jeep dealerships and assembled the worlds largest automobile collection, which the Internal Revenue Service allowed him to write off as a business expense.

With both his casinos booming and no inclination to take on the competition in Las Vegas, Harrah next turned to the hotel business. He constructed the highest building in Reno, a 24story hotel across the street from his casino. Completed in 1968, it cost about $7 million. Next he erected a luxurious 18-story hotel, which opened in 1973, on his Lake Tahoe property. Every room came with a view of the lake and two marble-finished bathrooms.

Public Company in the 1970s

In part to finance these ventures and support his lifestyle (he was married six times), Harrah took his company public in 1971, raising $4 million after taxes and expenses by offering 13 percent of the stock at $16 per share. No Wall Street firm would handle the offering, but it was oversubscribed, and within a year the stock had soared to $71 per share. Overcoming the financial sectors misgivings about the gambling industry, Harrahs became, in 1973, the first casino company listed on the New York Stock Exchange.

Harrahs net sales increased from $77.9 million in 1970 to $195.6 million in 1979, and net income grew from a low of $4.3 million in 1971 to a record $16.9 million in 1978. One securities analyst called Harrahs the most tightly controlled and best managed casino company in the world. Its two casinos, operating around the clock every day of the year, accounted for about 10 percent of Nevadas gambling volume. Games of chance now included baccarat, poker, and keno, as well as the roulette, blackjack, craps, and bingo tables and 3,733 slot machines. The 1,600 seats at the theater-restaurants in Reno and Lake Tahoe were almost always filled every night. The two hotels enjoyed a 92 percent occupancy rate. Nearly 250,000 customers came every year by bus, leading Harrahs president to acknowledge, We are the Safeway of the industry.

By the late 1970s, however, Harrahs was beginning to encounter difficulties from the opening of competing hotel-casinos in Reno and environmental constraints on further development in the Lake Tahoe area. The company scrapped plans to open a new Reno hotel-casino just across the street from the existing one and a combination hotel-casino and theme park just outside the city. When Harrah died in 1978, he left his heirs almost six million shares of stock in his company, but no cash to pay estate taxes of $35 million or a $13 million debt to a Reno bank.

Holiday Inns Subsidiary in the 1980s

At this point a buyer for Harrahs emerged in the unlikely form of family-oriented Holiday Inns, Inc., a Memphis-based company previously run by pious Baptists opposed to gambling. Even before Harrahs death, however, Holiday Inns executive Michael Rose was seeking his participation in a joint venture in Atlantic City, New Jersey, where gambling had been legalized in 1977. The company bought, in 1979, a stake in a casino adjacent to the Holiday Inn on the Las Vegas Strip. It was renamed Holiday Casino and, later, Harrahs Las Vegas. Holiday Inns also announced plans to build two casino-hotels in Atlantic City. In February 1980 the company acquired Harrahs, which was still about 70 percent owned by William Harrahs estate, for $310 million in cash and notes. Rose, who became chief executive officer of Holiday Inns the next year, sold most of Harrahs 1,400 automobiles for $100 million and gave the rest to a Reno museum.

Now a wholly owned subsidiary of Holiday Inns, Harrahs became the operator of a casino opened in 1980 on marshland a mile and a half north of Atlantic Citys boardwalk and named Harrahs Marina Hotel Casino. It had 506 guest rooms, a casino with capacity for 6,300 patrons, and an array of other spaces, including restaurants and bars, a Broadway-sized theater, conference and meeting rooms, a high-rise garage for 2,100 cars, and a fun center for children and teenagers. A 264-suite tower was added later. Harrahs Marina (later renamed Harrahs Atlantic City) proved to be the most consistently profitable casino in Atlantic City. In 1985, for example, the facility earned $48.8 million before taxes, by far the best performance of any of the 11 Atlantic City casinos.

In 1984, Harrahs opened, in partnership with real estate developer Donald J. Trump, the tallest building on the Atlantic City boardwalk, the 39-story Harrahs Trump Plaza hotel and casino. The joint venture, built by the Trump Organization on Trump land but with Harrahs money, collapsed in acrimony when the competing Trumps Castle made its debut the following year right across the street from Harrahs Marina. In 1986 Trump bought Harrahs half-share in Trump Plaza (Harrahs name had been removed) for $59.1 million.

Company Perspectives

Harrah s Entertainments vision is to offer exciting environments and to be legendary at creating smiles, laughter and lasting memories with every guest we entertain. The company s mission is to build lasting relationships and create A Great Time, Every Time Guaranteed, by delivering comfort, action, shot to win and hospitality (C.A.S.H.)-to-the MAX through enthusiastic, highly trained, friendly, attentive and empowered employees who have pledged to provide unsurpassed entertainment and service to every guest.

Bills Lake Tahoe Casino was opened by Harrahs in 1987 on a 2.1-acre site adjacent to Harrahs Lake Tahoe. The following year Harrahs Laughlin was opened in Laughlin, Nevada, on a natural cove on the Colorado River, with 464 hotel rooms and 26,500 square feet of casino space. Late in 1988 a second Laughlin hotel tower was completed.

Headlong Expansion in the 1990s

In 1989 Holiday Corp., formerly Holiday Inns, became The Promus Cos., Inc. The following year Rose sold the Holiday Inns hotel chain to Bass PLC of Great Britain for $2.23 billion. Holiday shares were then converted, on a one-for-one basis, to Promus shares, with Holidays Embassy Suites, Hampton Inn, and Homewood Suites hotel divisions remaining as Promus units. Harrahs continued to thrive as the companys casinoentertainment division and in 1991 relocated its headquarters from Reno to Memphis.

Casino gambling had been legal only in Nevada and New Jersey until 1989, but between 1989 and 1996 it was legalized in some form in 21 additional states. In 1993 Harrahs established a new division for riverboat casinos and opened the first of these facilities along the Illinois River in Joliet, Illinois. A second Joliet floating casino opened the following year. Also during 19931995 Harrahs established riverboat casinos along the Mississippi River in Vicksburg and Tunica, Mississippi, the Red River at Shreveport, Louisiana, and along the Missouri River in North Kansas City, Missouri. A second Tunica riverboat opened in 1996.

Harrahs also continued to create land-based casinos in the 1990s. Eagle Gaming, L.P., one-sixth owned by Harrahs, opened casinos in the Colorado historic mining towns of Central City and Black Hawk in 1993. They were managed by Harrahs for a fee. In addition, in 1992 Harrahs announced the creation of a new division for casinos on Indian lands. Congress had, in 1988, passed a law legalizing games of chance on Indian reservations in any state where such games were allowed for churches, temples, and veterans and other groups. By August 1993 no less than 73 tribes in 19 states were offering or would soon be offering full-scale casino gambling. Harrahs Ak-Chin, near Phoenix, opened in December 1994. A year later the Upper Skagit Indians and Harrahs opened a casino entertainment complex about 70 miles north of Seattle.

On February 1, 1996, Harrahs celebrated the grand opening of its first international casino entertainment complex, Sky City Casino in Auckland, New Zealand. This property consisted of 45,000 square feet of casino space and was also to include a hotel, theater, and 1,076-foot-high tower. The company, which held a 20 percent share in the joint venture, was to manage it for a fee.

An embarrassment for Harrahs was the failure of Harrahs Casino New Orleans, which was owned by Harrahs Jazz Co., a partnership in which a subsidiary of Harrahs Entertainment held a 47 percent interest. On the edge of the French Quarter, this temporary casino (a permanent one was under construction) opened in 1995 but closed in nine weeks, grossing less than half of its projected $33 million a month and causing the partnership to file for bankruptcy. Harrahs Entertainment wrote off $93.5 million of losses in the failed venture but was not responsible for Harrahs Jazz Co.s $435 million junk bond debt.

In late 1995 Harrahs and Players International, Inc. broke ground on a joint riverboat casino entertainment complex in Maryland Heights, Missouri, a suburb of St. Louis. Each company was to operate two boats, connected by a shoreside entertainment mall anchored by a 291-room hotel managed by Harrahs. During 1995 Harrahs also announced plans for major expansions of its Las Vegas and Atlantic City casino properties, including the addition of a hotel tower and additional casino space. Construction of a $78 million expansion of Harrahs North Kansas City also began that year.

In 1995, the Promus Cos. divided into two separate corporations, with the casino division becoming Harrahs Entertainment, Inc. and the hotel division Promus Hotels Corp. Rose remained chairman of both companies. By the end of February 1996, Harrahs offered 16 casinos with 592,500 square feet of space, 16,377 slot machines, 898 table games, 63 restaurants, and 21,905 parking spaces. There were 5,736 hotel rooms at the end of 1995. Gaming volume came to $20.6 billion that year, compared to $8.5 billion in 1991. Harrahs long-term debt was $753.7 million in 1995.

The riverboat division was Harrahs most lucrative in 1995, accounting for 43 percent of its $354 million operating profit, followed by Atlantic City (22 percent), Southern Nevada (18 percent), and Northern Nevada (16 percent). Of Harrahs $1.55 billion in revenues that year, the riverboat operations accounted for 38 percent, followed by Atlantic City (22 percent), Northern Nevada (20 percent), and Southern Nevada (19 percent). Net income was $78.8 million.

A key marketing tool was the Harrahs Gold Card, accepted at each Harrahs property. Its database included, in 1994, 3.2 million cardholders and 3.1 million potential cardholders who had stayed at a Harrahs property or played in one of the casinos. In addition to enabling the company to follow trends in play and the popularity of certain games, the gold card was used to gather information on guests for marketing purposes and to reward them, based on volume of play.

Principal Subsidiaries

Aster Insurance Ltd. (Bermuda); Harrahs Operating Co., Inc.

Further Reading

Berger, Meyer, The Gay Gamblers of Reno, Saturday Evening Post, July 10, 1948, pp. 2223, 74, 76, 78.

Bukro, Gary, The Christmas Tree Is in the Mail, Really, Chicago Tribune, November 23, 1995, Sec. 2, pp. 1, 4.

Getmanikow, George, Holiday Inns Discards Family Image for Stake in Gambling Industry, Wall Street Journal, January 11, 1980, pp. 1,31.

Hughlett, Mike, Analysts See Rosy Future for Harrahs Parent, New Orleans Times-Picayune, December 17, 1995, p. F3.

Johnston, David, Temples of Chance, New York: Doubleday, 1992, pp. 39 +.

Land, Barbara, and Land, Myrick, A Short History of Reno, Reno and Las Vegas: University of Nevada Press, 1995, pp. 9296.

The Last Harrah, Forbes, October 16, 1978, p. 66.

The Legacy of William Harrah, Harrahs People, Spring 1995, pp. 411.

McDowell, Edwin, Promus Proposes To Divide Its Units into Two Companies, New York Times, January 31, 1995, pp. D1, D7.

Mandel, Leon, William Fish Harrah, New York: Doubleday, 1982. Monroe, Keith, The New Gambling King and the Social Scientists, Harpers Magazine, January 1962, pp. 3541.

Taking the Risk Out of Gambling, Time, November 21, 1977, p. 78.

The Two Faces of Bill, Forbes, July 1, 1972, pp. 39, 41.

Wernick, Robert, The Worlds Biggest Gambler, Saturday Evening Post, February 13, 1965, pp. 2732.

Robert Halasz

Cite this article
Pick a style below, and copy the text for your bibliography.

  • MLA
  • Chicago
  • APA

"Harrah’s Entertainment, Inc.." International Directory of Company Histories. . Encyclopedia.com. 25 Sep. 2017 <http://www.encyclopedia.com>.

"Harrah’s Entertainment, Inc.." International Directory of Company Histories. . Encyclopedia.com. (September 25, 2017). http://www.encyclopedia.com/books/politics-and-business-magazines/harrahs-entertainment-inc-0

"Harrah’s Entertainment, Inc.." International Directory of Company Histories. . Retrieved September 25, 2017 from Encyclopedia.com: http://www.encyclopedia.com/books/politics-and-business-magazines/harrahs-entertainment-inc-0