by Hector San Miguel
Harrah's Entertainment may increase the initial $157 million it wants to spend on Louisiana Downs, the Bossier City racetrack it purchased this year. The casino company plans to install 1,500 slot machines at the track when the acquisition is complete.
In a third-quarter report filed with the U.S. Securities and Exchange Commission, Harrah's officials said they may up the ante.
"We announced plans to spend approximately $157 million for the acquisition, slot installation, and other renovations; however, we are reviewing renovation plans and may increase our anticipated spending for this project," the document said. "Assuming the acquisition is completed, the expanded entertainment complex, which would be the only land-based gaming facility in northern Louisiana, would begin operations in the summer of 2003. The acquisition, which is subject to applicable regulatory approvals, is expected to close by the end of 2002."
Phil Satre, Harrah's chief executive director, and Gary Loveman, Harrah's chief operating officer, talked about the Louisiana Downs acquisition during a recent conference call regarding the third-quarter financial results.
"I view this as an important transaction for our company," Satre said. "Many people in our industry, including myself, believe racinos will be an important growth-driver for the casino business. Our experience with this type of operation...positions us to take advantage of this trend in our industry."
Harrah's operates a Greyhound track in Council Bluffs, Iowa. The track has 1,500 slot machines.
"I'm particularly excited about this transaction for several reasons," Loveman said. "First, I'm very confident we will enjoy a significant financial return. By utilizing our existing database of customers, we will drive business to the track with far fewer marketing dollars that are typical for a new operation."
State Rep. Ronnie Johns said casino companies buying racetracks to install slot machines will help the racing industry statewide. Johns was one of the major co-authors of the legislation that allowed racetracks to have slot machines.
He cited Boyd Gaming's $130.1-million purchase of Delta Downs near Vinton as a good example. The slots have generated more than $85 million in gross revenues for the track since February.
"The purse money is going to be incredible over the course of the next year," Johns said. "I don't think anybody will argue the fact that it is a significant slots operation, but I don't think it's overshadowing the fact that it has absolutely revitalized the racing industry."
The slots have generated more than $13 million in purses for Delta Downs in an eight-month period.
"Even Fair Grounds will tell you today that Delta Downs, as small a track as it is, is hurting it," Johns said. "We have been told those horses that would traditionally run at Fair Grounds want to come and run (at Delta Downs) because of the bigger purses."