Loveman addicted to Loveman

Gary Lovemen, brilliant mathematician, who drove Harrah's from a non-entity to the MacDonald's of Pop and Slots by sucking in the suckers, whose success has gone to his waistline can't understand that as folks have figured out that along with his financial success comes cannibalization and crime, not everyone wants his snake oil.

Loveman seems addicted to Loveman these days.

It seems money markets have defined casino capitalism for what it is - Gambling.

Harrah's pulls $575m flotation
as gaming hits a losing streak

Caesars Palace owner hit by slump in US consumer spending, while debt from private equity buyout costs $1.5bn in interest


Las Vegas, and Harrah's, have been badly hit by the US recession, with property values collapsing and the municipality insolvent.

Harrah's Entertainment, the major US gambling group, which operates Caesars Palace in Las Vegas and four casinos in London, has abruptly shelved plans for a $575m (£360m) share offering in New York, citing weak investor demand.

The cancellation, which came on the heels of a $22bn General Motors share offering launched successfully in New York, has sent a chill through the gambling and private equity industries.

Harrah's, which is renaming itself Caesars Entertainment, operates the Rendezvous Casino in Mayfair and the Golden Nugget off Piccadilly Circus, the World Series of Poker tournament, as well as 50 hotels and casinos in the US under the Caesars, Harrah's and Horseshoe brands.

One of the largest global gaming companies, Harrah's public offering comes less than three years after it was purchased for $31bn by the New York private equity firms TPG and Apollo Management.

Leading financiers, including the sub-prime hedge fund king John Paulson, are exposed; the company says it is keeping its options open on a future offering.

The failure to complete the initial public offering (IPO) suggests that the eagerness of banking and private equity to get into the gambling business was misguided.

Expectations of an online gambling boom have not been realised; the US industry, where Harrah's is focused, has been hit hard by the two-year downturn in consumer spending. Last year, the casino operator MGM nearly collapsed under its $14bn debt. While stocks in operators such as Las Vegas Sands and Wynn Resorts have risen this year, most growth has come from a Chinese-driven gaming boom in Macau.

Despite Las Vegas's ardent efforts to promote itself through Hollywood movies as the anything-goes capital of America, the desert city is experiencing the worst downturn in its history. Property values in what was the fastest-growing city in the US five years ago have collapsed and the surrounding municipality of Clark County is in effect insolvent. Unemployment stands at 14.3%, well above the 9.5% national average.

In the post-credit crunch landscape, banks have had to pick up the pieces. Next month, Deutsche Bank will become owner of the Vegas strip's newest hotel-casino, The Cosmopolitan, after its original developer defaulted on a $1bn loan. The bank then put $3bn more into the hotel, which features the rapper Jay-Z at its New Year's Eve party and is promoted with the slogan: "Just the right amount of wrong."

For Harrah's, the only US operator without a casino in Macau, the plan to sell less than 10% of company stock in an uncertain market for public offerings was itself a gamble. Harrah's has reported a loss of $634.4m in nine months. As the most highly leveraged of the big casino firms with $20bn in debt, it paid about $1.47bn interest over the same period.

Analysts say the industry is picking up but is not strong enough to withstand the test of an IPO amid fears over European debt woes and China's currency controls.

In a speech to a gaming convention last week, Harrah's president Gary Loveman indicated that a major block to growth of casino companies was lack of consumer access. Loveman said casinos should be given the same freedom to market as other products or activities considered unhealthy, such as alcohol or fast foods. "It should offend us every day that adults can't entertain themselves in the way that they want to when they have access to so many other things," Loveman said. [Oh? Never one to suffer pangs of conscience when confronted with an Industry that only profits by continuing to create Gambling Addicts!]

Gambling industry executives in Vegas claim the market is improving, with international visitors up 8% on a year ago. But after years of price-cutting, many visitors are considered "low rollers" drawn by cheap hotel rooms but gambling little.