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Merger Mania in the Casino Industry

12 October 2004

Merger mania has been the norm in the casino industry for years, as we've seen more and more casinos in the hands of fewer and fewer companies.

The latest round includes two enormous deals that figure to trigger fallout that reaches the Midwest. The MGM-Mirage merger with Mandalay Resorts, coupled with the Harrah's Entertainment purchase of Caesars Entertainment, figures to lead to some smaller deals along the way.

Closest to home, the purchase of Caesars will leave Harrah's in control of three Indiana properties - Harrah's East Chicago, Horseshoe in Hammond and Caesars Indiana in Elizabeth, just across the Ohio River from Louisville, Ky. Indiana law already was amended once to permit casino companies to hold two licenses. If it's not amended again, Harrah's will have to divest itself of one of the three.

In Michigan, the MGM-Mirage/Mandalay merger means the MotorCity casino probably will be sold. By law, the three Detroit casinos must have different owners. MGM-Mirage owns 97 percent of MGM Grand-Detroit, while Mandalay Resorts owns 53.5 percent of MotorCity.

It'll be next year before the Federal Trade Commission and casino regulatory bodies in the host states sort out everything, but there's sure to be a number of smaller sales triggered along the way.

Combined, the two megadeals involve 16 of the 25 major resorts on the Las Vegas Strip. Perhaps none of those casinos will have to be sold, but other markets are a different story. The August issue of the Las Vegas Advisor points out that with the Caesars deal, Harrah's would control four of the five casinos in South Lake Tahoe, Nev. It's likely that Harrah's will have to divest itself of a casino or two there.

Is all this good or bad for players? Some of each, most likely. Ideally, competing owners spur each other to offer a better product and do more for their customers. The concentration of multiple casinos in the same market removes some of that pressure. On the other hand, owning multiple casinos in the same market heightens the benefits operators can offer their customers.

Expect multiple-casino rewards programs, with Harrah's Total Rewards as a model, to become an industry standard. We've already seen the beginnings of this, and not just with Total Rewards. When I was in Las Vegas in June, I was able to redeem points I earned at Boyd Gaming's California at Boyd's other downtown properties, Main Street Station and the Fremont, and could use meal coupons I was given at the California not only downtown but at Boyd's Stardust resort on the Strip. Park Place Entertainment, the company that became Caesars Entertainment, linked its Las Vegas casinos through its Connections card. Even on a local level, for a brief time before the Illinois Gaming Board put an end to it, customers were able to use the same rewards card at the Empresses in Joliet and Hammond.

We're going to see much more of that. At the rate merger mania is going, in a few years a player who carries five or six rewards cards will be covered in just about any casino in the country.

***

Ever since Chicago-area casinos started ticket-in, ticket-out payoffs, I've been receiving e-mails such as this: "I can't tell you how disappointed I am that Harrah's East Chicago put this TITO on slot machines. I've always liked to hear the coins dropping. When I complained, they told me it was there for my benefit."

The Harrah's employee may have overstated things a bit. TITO is at least as much a benefit to owners in time and money as it is to players. But there are benefits to the customers - no waiting for hopper fills and hopper jams, no lugging of heavy coin cups, and availability of penny and 2-cent games that wouldn't be there without TITO.

Before long, just about every U.S. casino will be fully equipped with ticket printers. Players not only will get used to it, I think most will come to prefer it.

***

Votes are in for the vpFree Video Poker Hall of Fame, and this year's winner is well-known video poker analyst Bob Dancer, author of Million Dollar Video Poker, contributor to a number of magazines, instructor at video poker seminars in Las Vegas and a casino consultant.

That's no surprise, and a selection with which I heartily concur. When I was informed that I was nominated, I e-mailed fellow nominee John Robison to congratulate him and to say we now could sit back and see whether it was Dancer or "Frugal Gambler" Jean Scott who was elected. Scott was a narrow runner-up.

You can see the Hall of Fame at members.cox.net/vpfree/HOF.htm. While you're at that Web site, check out the database of the best video poker games available around the country.

***

Speaking of video poker, my Video Poker Answer Book is available again after selling out of its first printing last year. It's the start of a busy period for me. My new Video Slot Machine Answer Book is due out this fall, with a revised edition of The Slot Machine Answer Book to follow by the end of the year.

Merger Mania in the Casino Industry is republished from Online.CasinoCity.com.
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Best of John Grochowski
John Grochowski

John Grochowski is the best-selling author of The Craps Answer Book, The Slot Machine Answer Book and The Video Poker Answer Book. His weekly column is syndicated to newspapers and Web sites, and he contributes to many of the major magazines and newspapers in the gaming field, including Midwest Gaming and Travel, Slot Manager, Casino Journal, Strictly Slots and Casino Player.

Listen to John Grochowski's "Casino Answer Man" tips Tuesday through Friday at 5:18 p.m. on WLS-AM (890) in Chicago. Look for John Grochowski on Facebook and Twitter @GrochowskiJ.

John Grochowski Websites:

www.casinoanswerman.com

Books by John Grochowski:

> More Books By John Grochowski

John Grochowski
John Grochowski is the best-selling author of The Craps Answer Book, The Slot Machine Answer Book and The Video Poker Answer Book. His weekly column is syndicated to newspapers and Web sites, and he contributes to many of the major magazines and newspapers in the gaming field, including Midwest Gaming and Travel, Slot Manager, Casino Journal, Strictly Slots and Casino Player.

Listen to John Grochowski's "Casino Answer Man" tips Tuesday through Friday at 5:18 p.m. on WLS-AM (890) in Chicago. Look for John Grochowski on Facebook and Twitter @GrochowskiJ.

John Grochowski Websites:

www.casinoanswerman.com

Books by John Grochowski:

The Craps Answer Book

> More Books By John Grochowski