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Last Updated: Tuesday, 3 August, 2004, 21:58 GMT 22:58 UK
Why Vegas's casinos are getting cosy
Stephen Evans
By Stephen Evans
BBC North America business correspondent

Harrah's and Caesars casinos in Las Vegas
Vegas is the scene of many hastily-arranged marriages

Suddenly there are only two high-rollers at the table.

A pair of mergers now leaves two players dominating the casino industry in America.

The question is whether you can get real competition in a game involving only two companies.

The moment MGM Mirage said it would acquire the Mandalay Resort Group in June, a deal between Harrah's Entertainment and rival Caesars Entertainment was on the cards.

With the terms agreed, the competition authorities will now scrutinise them.

Both groups know that bigger means better in the industry because gamblers can be enticed to stick with one company, say through deals on hotels or packages in Las Vegas or by offering gamblers in one small establishment favourable terms at glitzier places under the same ownership.

Bigger - and better?

As it turns out after the merging, Harrah's and Caesars - both based in Las Vegas - will be bigger than MGM Mirage.

The enlarged Harrah's has revenue of nearly $9bn (5bn), compared with around $7bn for MGM Mirage. It will have 96,000 employees, compared with MGM Mirage's 64,000.

Harrah's built its empire around the US, largely on local establishments on river-boats or Indian land.

Slot-machines rather than gaming tables were the foundation. But to that low-end base, it will add high-end gambling in Las Vegas, including the venerable Caesars Palace.

Playing hard

There's serious money to be made.

Vegas croupier
As gambling grows, there's plenty more money on the table
Gambling seems to be assuming an aura of respectability: the laws are changing to allow it in more places, not only in America but in countries like Britain.

And not only is gaming not frowned on as it used to be, but naughtiness is even becoming respectable.

Las Vegas has an advertising slogan: "What happens in Vegas, stays in Vegas" - a code, it seems, for telling people that they can get away with all kinds of things that their families and friends and employers might not find that attractive.

Increasingly, Las Vegas is the setting for drama on television, complete with the sex and sin for on which the city was built.

Changing challenges

For Harrah's the task will be to persuade what it calls its "avid gamblers" who don't usually travel far (or seek many frills) to make the trip up-scale to the world's gambling capital.

MGM, on the other hand, will concentrate on better deals for those who go to Las Vegas for a few days, perhaps not with gambling as the primary purpose.

The task is to get the conventioneers and general tourists into its particular complexes and keep them there.

But first the regulators. There seems little doubt that both companies will have to answer some searching questions and will probably have to divest themselves of some establishments.

They will argue that there's a heap of competition on the way, whether it be online or as laws are loosened and gambling allowed by states which need tax revenue.

Gambling may not be what your grandmother would have approved of - but it is becoming more acceptable and it's certainly becoming more profitable.

Harrah's to buy Caesars for $5bn
15 Jul 04 |  Business
Casino giant created in Las Vegas
16 Jun 04 |  Business


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