Issue 289
March 27 - April 2, 2006
Volume 6
page 1

This Issue

Gaming News

Casino City's March Sweepstakes

Gambling industry continues to attract capital

Betting the 'Net

Greektown Casino changes plans; wants to build hotel atop parking garage accuse banks of 'blatant profiterring'

Show Time Sting will be at The Mandalay Bay Events Center.

Column An Introduction to Texas Hold'em Bonus Poker By Elliot Frome

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Harrah's Announces First Phase of Biloxi Reopening
Press Release

LAS VEGAS - March 21, 2006--Harrah's Entertainment, Inc. (NYSE:HET - News) today announced plans to reopen Grand Casino Biloxi this summer, in the first phase of plans to create a destination resort on the Mississippi Gulf Coast.

Pending regulatory approval, Grand Casino Biloxi is expected to reopen in mid- to late summer 2006, following an extensive renovation project. The property's existing land-based facilities, including the Bayview Hotel tower and the convention center, will be completely redesigned and rebuilt into a casino and a 500-room hotel, featuring a steakhouse, a 300-seat buffet, a swimming pool, and a 16,000-square-foot full-service spa. The resort is expected to initially employ more than 1,000 people.

"We're excited to begin the process of rebuilding on the Mississippi Gulf Coast," said Gary Loveman, chairman, chief executive officer and president of Harrah's Entertainment. "The Grand will return with the kind of high-quality casino entertainment experience our customers have come to expect. We look forward to contributing to the restoration of the Gulf Coast's tourism industry, and to getting our employees back on the job as quickly as possible."

Karen Sock, formerly assistant general manager of Grand Casino Gulfport, will be named senior vice president and general manager of Grand Casino Biloxi, subject to regulatory approvals. Sock, with more than 20 years of experience in the gaming and hospitality industries, served as vice president of human resources at Harrah's New Orleans before joining Grand Casino Gulfport in June 2005. She will report to Tom O'Donnell, Harrah's Gulf Coast regional president.

The summer reopening will be the first step toward Harrah's development of a world-class resort in the Biloxi market. The project is in the design phase, focusing on the opportunities provided by the introduction of shore-based gaming. Harrah's expects to announce preliminary plans for this development in mid-2006.

"In the coming months and years we will develop our property in Biloxi into a true destination resort, building on the Mississippi Gulf Coast's position as a must-visit vacation spot," said Anthony Sanfilippo, president of Harrah's Central Division.

Harrah's Entertainment, Inc. is the world's largest provider of branded casino entertainment through its operating subsidiaries. Since its beginning in Reno, Nevada 68 years ago, Harrah's has grown through development of new properties, expansions and acquisitions. Harrah's Entertainment is focused on building loyalty and value with its customers through a unique combination of great service, excellent products, unsurpassed distribution, operational excellence and technology leadership.

Gambling industry continues to attract capital

As Reported by Reuters

LOS ANGELES - The merger-happy casino industry is getting thin on takeover targets, but the buyout announced this week for Kerzner International Ltd. shows deal-making can continue at the right price, industry experts said.

"It is hard to see what will be the next target, but given the high amounts of capital interested in these types of assets, other transactions could follow," Goldman Sachs analyst Steven Kent said in a research note.

Investors led by Kerzner Chairman Sol Kerzner and his son, Butch, the company's chief executive, offered to pay about $3 billion to take the Bahamas-based company private.

The deal follows news last week that Aztar Corp., owner of Tropicana casinos in Las Vegas and Atlantic City, agreed to be acquired by riverboat gambling operator Pinnacle Entertainment Inc. for about $1.45 billion.

Remaining takeover candidates include Ameristar Casinos Inc. and riverboat and dockside casino company Isle of Capri Casinos Inc., but both are majority-owned by insiders. said Jefferies & Co. analyst Larry Klatzkin.

"Once a family decides to sell, the deal can be done quickly. But if they don't want to sell, a deal won't get done," he said.

Gambling's popularity has skyrocketed in recent years along with the value of the underlying real estate, but because so many regulations limit where casino operators can expand, acquisitions have been a key growth engine.

"The obvious companies out there are gone ... Argosy and Aztar were always the two freighted to go someday," Klatzkin said, referring to riverboat casino operator Argosy Gaming Co., which was acquired in October by casino and racetrack operator Penn National Gaming Inc. for about $1.4 billion.


Last year's other high-stakes deals were Harrah's Entertainment Inc.'s $6.8 billion acquisition of Caesars Entertainment and the $5 billion buyout by MGM Mirage of Mandalay Resort Group.

Kent said the Kerzner buyout, at 16.6 times estimated 2006 earnings, represents a clear premium to recent acquisitions in the gaming space which have had earnings multiples ranging from 7 to 10, with Aztar going for a multiple of 8.7.

Private buyers may be willing to pay more than public companies because of favorable financing terms and stock multiples that, in some cases, underestimate the true value of underlying real estate, Deutsche Bank analyst Marc Falcone said in a report.

Analysts also cite the January announcement that a Saudi prince and Colony Capital will pay $3.9 billion to buy luxury hotel operator Fairmont Hotels & Resorts Inc. as further evidence that consolidation and perceptions of high asset value remain themes in the gaming and lodging sector.

Kerzner and Fairmont "demonstrate the healthy appetite for international leisure real estate assets," Kent said.

The Kerzner investor group also opened up a 45-day window to solicit competing bids.

Bear Stearns analyst Joe Greff said a competing bidder -- most likely private equity or an international resort operator -- is possible, but they would have to convince the Kerzner family to stay on. "This would be challenging and complicated," he said in a report.

Other big casino operators are also controlled by insiders: MGM is majority owned by Kirk Kerkorian's Tracinda Corp., while Las Vegas Sands Corp., operator of the Venetian resort in Las Vegas, is controlled by chairman Sheldon Adelson.

Directors and executives at Wynn Resorts LLC, including Chairman and CEO Steve Wynn, own 52 percent of the company. Wynn had previously founded Mirage Resorts, which was acquired by MGM in 2000.

"Wynn wasn't a seller, but everything is for sale at a price ... dramatic changes can happen," Klatzkin said.

Other tightly controlled casino companies include Boyd Gaming Inc., in which insiders, including Chairman and CEO William Boyd, own some 52 percent of outstanding shares.

Donald Trump holds a 30-percent stake in Trump Entertainment Resorts Inc., following the company's emergence from bankruptcy last May.

At Penn National and Station Casinos Inc., insiders own less than 20 percent of outstanding shares, while management insiders at Harrah's own 4.1 percent of shares.

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