Monday, August 16, 2010

Harrah's selected as minority partner, operator of Cincinnati casino

Harrah's Entertainment has been selected by Rock Gaming LLC to operate the $400 million casino planned for Downtown Cincinnati.

The two parties have entered into a non-binding agreement to form a joint venture to develop and operate casinos both on the 20-acre in Cincinnati and between the Cuyahoga River and Huron Street in Downtown Cleveland.

Under terms of the agreement, Harrah's will make a "significant investment" and become a minority partner in the venture. The company will also manage day-to-day operations.

Detroit-based Rock Ventures (Rock Gaming LLC) says it hopes to break ground later this year on a 500,000-square-foot complex, with completion by 2012. Preliminary designs show a 4,000-space parking garage, and four restaurant sites and between four and six retail sites lining Reading Road, Broadway, and E Court Street.

It originally planned to have an operator named by April – and then June – but took its time on the selection to ensure that it could locate an established operator that could integrate the casino into the surrounding, urban fabric.

"Our team is certain that Harrah's top-notch and innovative management team is completely aligned with our unwavering commitment to create and deliver projects that embrace and interact with the downtowns they serve," said Rock Ventures principal Dan Gilbert in a media release.

Economic expansion

The move is widely viewed as a broader strategy by Harrah's to spread into more markets, growing its revenue and expanding its customer base. Approximately one-third of the company's annual revenue of $8.9 billion comes from its assets in Las Vegas and Atlantic City.

But the company is carrying a debt load of more than $18 million, and lost $469.9 million during the first half of 2010.

Cincinnati's casino alone is expected to generate nearly $520 million in annual gambling activity and to bring more than six million annual visitors Downtown. The casino would employ approximately 2,800, with an average wage of $33,000.

"We look forward to the opportunity to bring our casino brands, management expertise and Total Rewards customer loyalty program to Ohio," said Harrah's Entertainment chairman, CEO and president Gary Loveman. "Harrah's shares a common vision with Rock Gaming to develop and manage first-class urban-based casinos that will be a catalyst for economic expansion and job creation in both markets."

The joint venture is expected to be finalized this fall. Among the details to be worked out are the receipt of regulatory approvals, the parties' agreement on development plans for the projects, and the cost and availability of financing for the projects.

Ohio voters approved casinos for Cincinnati, Cleveland, Columbus and Toledo by a statewide referendum last November.

Casinos in Columbus and Toledo will be operated by Penn National Gaming. The Toledo casino broke ground last Thursday.

Previous reading on BC:
Bridging Broadway steps in to address casino issues (8/2/10)
Strickland signs casino rules, with reservations (6/14/10)
Casino on the agenda for upcoming 'Power Breakfast' (4/22/10)


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