Caesars And Harrah's Have Big Plans--If Their Merger Gets Approved

Camera-equipped tables, bar-coded cards, and slot-machine ''luck ambassadors'' are just a few of the tech tricks the casino companies are starting to employ.

Tony Kontzer, Contributor

August 20, 2004

4 Min Read

If regulators bless Harrah's Entertainment Inc.'s pending $9.4 billion acquisition of Caesars Entertainment Inc.--and that's a big if--the two companies will bring together complementary strengths in the hot-button IT area of better understanding their customers.

Caesar's has been making big commitments to collecting that kind of information, and Harrah's continues to expand its ability to analyze and act on it. Given that the proposed deal isn't scheduled to close for at least a year, the companies' CIOs are mum on details, including whether Caesars' new loyalty program that rewards frequent guests and casino players survives or gets folded into Harrah's. But Caesars CIO Carol Pride and Harrah's CIO Tim Stanley say they're convinced the casino combo makes sense.

Regulatory approval of the deal is far from certain. The Securities and Exchange Commission, Federal Trade Commission, and state and local gambling authorities already have their hands full with MGM Mirage's proposed $7.7 billion acquisition of Mandalay Resort Group, announced in June. The potential combining of the country's top four casino companies into two that would control most of the Las Vegas strip and about 15% of the nation's gambling revenue raises antitrust issues that could give regulators pause.

Still, Caesars and Harrah's are pushing ahead. Pride, who assumed Caesars' CIO post two months ago from senior VP Bob Conover, now special assistant for strategic initiatives, says Caesars can learn from Harrah's extensive knowledge about its customers. But Harrah's, which gets 80% of its revenue from slot machines, can learn a lot from Caesar's about cards and dice. "Regardless of whether you bring strength or weakness to the table, you bring discussions," she says. "The [merged] environment will allow for a lot more breadth and depth to work with."

Harrah's Stanley says he's also looking forward to expanding Harrah's reputation for efficiency to the combined franchise. Although the companies' revenue last year was similar--$4.3 billion for Harrah's, $4.5 billion for Caesars--Harrah's $293 million in profit was more than six times Caesars'. "We think we can run the operation more profitably," says Stanley. "But we'll probably a learn a whole lot about entertainment."

As the two companies prepare to merge, both continue to invest in their respective strengths. Caesars has wrapped up a six-month trial deployment of a blackjack table-management technology from casino tech company Mindplay LLP. The system uses cameras to photograph every bet, and ultraviolet sensors to track bar-coded playing cards. The photos let pit bosses more accurately rate and compensate players by monitoring the action in painstaking detail from a monitor inside the pit. The card-tracking function ensures players aren't switching cards.

Caesars tested the technology at about a dozen tables at its Flamingo Las Vegas casino, and director of casino administration C.J. Graham is preparing to present the results to Caesars executives. "This will bring us up to speed with the slot technologies of the '90s," he says. Graham says he hopes to replace many of the casino's 70 tables with Mindplay-equipped ones, at a cost of about $20,000 a pop. That's relatively small change compared with the $130,000 already spent on new chips marked so they can easily be identified by denomination in photos.

"By positioning yourself at one screen, you can monitor an entire pit very easily rather than walking from table to table," says Flamingo assistant shift manager Joe Abacherli.

At Harrah's, the IT emphasis is still on crunching customer data to provide real-time rewards. The company is testing software that monitors players and taps a business rules engine to generate instant comps based on its own proprietary algorithms. It's also created a new category of marketer called "luck ambassadors" who, when prompted by software the company is testing, can instruct slots to print for players meal coupons, tickets to shows, or gambling vouchers.

Because table game players' betting tendencies have traditionally been rated based on estimates from the pit supervisors who eyeball them from time to time, casinos have tended to overcompensate those players. Stanley says he's concerned about the prospect of suddenly becoming accurate with table rating. "Customers will notice they may be getting less."

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