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Caesars' Gary Loveman On Bankruptcy, Internet Gaming and Atlantic City

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Gary Loveman
Caesars Entertainment

Gary Loveman is the now the chairman of Caesars Entertainment.

More than 15 years after joining the former Harrah’s, Gary Loveman is getting used to a new role with Caesars Entertainment Corp.

Today, he’s chairman of the privately-owned gaming company after retiring as CEO of Caesars on July 1.

Gary Loveman stepped down about six months after Caesars largest operating division - Caesars Entertainment Operating Co. - was placed into bankruptcy, a move Caesars hopes will remove some $10 billion in debt.

The company also faces challenges in Atlantic City, but on Aug. 4 said its net revenue increased 17.4 percent in the second quarter.

The Las Vegas-gaming company said its net income for the quarter ended June 30 was $15 million, or 10 cents per share, compard with a loss of $91 million, or $3.24 per share, during the same period last year.

Revenue in the second quarter was $1.1 billion.

Caesars chairman Gary Loveman joined KNPR's State of Nevada to talk about that and more.

What is your opinion of Sen. Harry Reid's decision to retire with his knowledge of the gaming industry? 

“Having someone who is as schooled in the industry as Sen. Reid is but also such an advocate in the position of either majority or minority leader in the United States Senate is a very hard thing to replicate. I think it is a blow to the industry that he is stepping down.”

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What is your management style?

"My ambition when it got into this was to set a vision where there were favorable results for the three principal constituents of the business, that is customers, the people who work in the business and the people who own the business, the shareholders whether they be common shareholders or the private equity shareholders we’ve had more recently."

“What we focused on, really from the beginning and throughout, is to build loyalty among customers who can choose gaming or other services from any of a number of providers here in Vegas who are literally next door to one another.”

How did you maintain a high level of service as the company expanded?

“The real trick about service in a hospitality business is because you did it well last night does not mean necessarily that you’ll do it well today. There is no inventory of this you have to recreate it every single time with every guest under experience”

What type of customer frequents a Caesars property?

“These brands each have a different presentation to the market and a different price point and we offer a lot of them, 10 of them here in Las Vegas, and we ask the customer to look these and decide based on the value proposition that each is providing, which suits them best and someone is happy at Caesars $400 a night and another person is equally happy at the Cromwell at $225 and someone else is thrilled at the Linq at $100”

Caesars Entertainment owns the World Series of Poker brand, but it seems Internet poker and online gaming in Nevada and New Jersey has stalled. Why do you think it stalled?

“I think it stalled in part because we don’t have a sufficient population of people from other states playing to make the offering as compelling as it needs to be. This is one of the great frustrations of the  years I’ve been in this industry is that something that is so intellectually straight forward has been so difficult to execute. The idea that Americans cannot legally play poker online, if they choose to do so, and can verify their age and location strikes me as almost crazy. Just illogical and yet that is the case outside of New Jersey, Delaware and Nevada”

Nevada Senator Harry Reid continues to align himself with Las Vegas Sands boss Sheldon Adelson in opposition to online gaming. The senator even told KNPR’s State of Nevada that online gaming “is not good for our country.” Are they both wrong? 

“I respectfully disagree with the senator with whom I have had countless conversations on this topic. I think that the world is one where, at the risk of sounding cliché, virtually every transaction or decision is now mediated through a digital interface on some type of mobile device and the notion that the one thing you can’t do is to play a game of chance or skill for consideration on a mobile device, I just don’t understand the logic of that.”

What will the future of online gaming look like?

“The solution for this is going to come from an unexpected place the major sports leagues in the United States lead by Adam Silver and the NBA have decided that they favor beating on sports which is an online experience. And once the NFL moves to the point where they in fact favor this, I think you will see a federal action that legalizes sports betting, somehow defined at the federal level and virtually every state will participate. Once that Rubicon has been crossed, I think poker will very naturally fall in because it has an awful lot of similarities to fantasy sports.” 

Earlier this year you placed your largest operating unit, Caesars Entertainment Operating Corporation, into bankruptcy. How difficult of a decision was that?

“There are companies that enter into bankruptcy because their fundamental business proposition doesn’t work any more like Radio Shack, where running retail outlets selling little electronic gadgets is no longer profitable, that was never the issue with Caesars. The issue here was we privatized the company at precisely the most inopportune moment in retrospect. The crop of companies that experienced these transactions in 2008 have almost all struggled.”

With hindsight was the leveraged buyout a good idea?

“It was wise as of the time it was made and that’s really only the way you could evaluate it. Now, after the fact, of course, it was not what any of the participants would have done had they known that come the second weekend of September 2008 Lehman Brothers would go bankrupt, the stock market would fall by half and consumers would be put into a terrible circumstance, foreclosures would be common all over the United States and so on.”

What will look like outside bankruptcy?

“I think Caesars is going to look a lot like a hotel company looks. So today, if you looked at Hilton, or Marriott, or Starwood, you would see an entity that manages an awful lot of hotels, only a portion of which it owns, and what you will find with a restructuring plan that has been proposed to our creditors is a circumstance where, as you describe, the real estate assets of these more than a dozen casinos, including Caesars, would be owned by investors separate from us and Caesars would manage those facilities on a long term basis with our brands and technology and we would continue to own and manage the many casinos here in Vegas in particular that are not a part of the bankruptcy.”

Is Las Vegas back from the Great Recession?

“The challenge is that gaming is relatively soft. The composition of gaming and the total spend in Las Vegas is falling consistently. The interest of our guests is increasingly in things other than gaming and we’re all moving our assets to support that as you’ve heard many of us describe. That’s all fine, but it makes meeting the standard of profitable that we had in 2007 hard and that hasn’t been achieved yet.”

Guests

Gary Loveman, chairman, Caesars Entertainment

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