Bill Harrah and Harrah’s Corporation
William Fisk Harrah (September 2, 1911 – June 30, 1978) founded Harrah’s casinos in Reno, Nevada with a tiny bingo parlor in 1937. It failed in less than a month.
However, he learned a valuable lesson after losing his investment and came back to Reno a year later and tried again. Eventually, Harrah’s became the best-known name in American casinos.
Bill Harrah was the son of attorney John Harrah, who dabbled in politics, small businesses, and provided counsel to a succession of bootleggers in 1920s California. Born in South Pasadena, California, Bill attended UCLA before purchasing a small business in Venice, California from his father called the Reno Game.
The game allowed up to 33 players to roll balls down small ramps and into slots, trying to register a four-card sequence. It was like filling a bingo card. And, whatever John and his father thought of their game, it was gambling. It got shut down regularly by local authorities.
However, twenty-year-old Bill invested his profits back into better prizes, nicer furnishings, and thoughtful marketing. Those three things would become a hallmark of successful Harrah’s casinos in the years to come.
Opening a Casino in Reno
In 1937, Bill Harrah opened a small bingo parlor at 124 North Center Street in downtown Reno, Nevada where gaming was legal.
Open just 17 days, Harrah lost his shirt and headed back to Venice. He had left friend and manager Bob Ring in charge of the Reno Game, and it continued to make money. Together they schemed on how to turn a profit in the town of Reno.
The following year, Harrah tried again. He opened Harrah’s Plaza Tango in July 1938 with partner Virgil Smith. Virgil was the financier. A month later he opened Plaza Tango at 14 East Commercial Row. Both clubs were nicely refurbished and provided a small cash stream.
Reno was a tough city where a few men ruled everything. Bill Graham headed the group. Harrah met with Graham, Jim McKay, and Nick Abelman to discuss opening a club right on Virginia Street. His acceptance in the Reno fraternity hinged on cash and connections.
He had the cash. His connection was ex-bootlegger Cal Custer, whom his father had represented many times.
As a friend of Graham’s, Harrah purchased Ed Howe’s Tango Club at 242 North Virginia Street. Howe wanted $25,000 but settled for just $1,000.
Harrah’s Reno opened in the 1940s and expanded backward across Lincoln Alley towards Center Street during the 1950s.
A hotel tower opened in 1969, and Harrah’s Center Street addition opened ten years later.
Harrah’s Lake Tahoe
Bill Harrah insisted that his casinos were a cut-above those around him. When he first saw the casinos at Lake Tahoe in the 1950s, he exclaimed,
Harrah purchased George’s Gateway Club at South Shore Lake Tahoe in 1955 and upgraded the property for the coming summer season. It did big business, and Harrah bought up the smaller properties around him to build the Lake Club.
Two years later he moved across highway 50 and purchased Sahati’s Stateline Country Club. The property became Harrah’s Lake Tahoe with a pair of restaurants, a showroom, 150 slots and 15 table games. It opened in time for the 1960 Olympic Games held at Squaw Valley Ski Resort nearby. A hotel tower opened in 1973.
Harrah’s Casinos Expand to Las Vegas
For several years, Harrah’s Lake Tahoe was the most profitable casino in the state, but that may have reflected the huge skim of Las Vegas casinos by the Mob.
Mostly because he wanted to take his company public. No gaming company had ever been listed on a major stock exchange.
Bill Harrah changed all that.
In 1971, Harrah’s Inc. made its initial public offering. In 1972, it was listed on the American stock exchange. The following year, Harrah’s became the first casino company listed on the New York Stock Exchange. Bill Harrah used the cash influx to build the hotel at Lake Tahoe.
Harrah’s expanded to Las Vegas in 1973 by purchasing the Holiday Casino next to the Sands Casino. Located on the Las Vegas Strip, Harrah’s was the first gaming company with casinos in Reno, Lake Tahoe, and Las Vegas.
By that time, Bill Harrah was a very rich man. He had a car collection with hundreds of rare cars, motorcycles, and even boats and planes. Housed in a huge warehouse in Sparks, Nevada, the collection was broken up after Bill Harrah died in 1978.
Harrah had six wives, including singer Bobbie Gentry, who soared to fame with “Ode to Billy Joe” and signed to play in the showroom at Harrah’s Reno. The Reno casino became a focal point of gaming in Nevada, training employees in a manner close to that of Disneyland managers. Harrah’s was also a pioneer in offering strong benefits and retirement plans for employees.
Bill Harrah allowed his top executives to manage their departments and used promotions and marketing to draw both new and repeat business from guests, not customers.
Unfortunately, executives wanted a quick solution to the problem. So did the family.
Harrah’s is Acquired by Holiday Inns
Mead Dixon brokered a $300 million purchase by Holiday Inns that provided quick cash and a successful transition to a more traditional corporate/hotel ownership. Unfortunately, the sale also allowed Holiday to liquidate Harrah’s 7,000 antique automobiles.
Sometimes a quick sale is a mistake, and within a decade, the sale of the collection alone recouped the entire $300 million purchase price.
Of course, the purchase included all the casinos, too. A very good deal for Holiday Inns. At the time of the purchase, Holiday owned a 40 percent stake in the Holiday Casino on the Las Vegas Strip. They were also building a casino in Atlantic City. It became Harrah’s Marina Casino.
In 1986, Holiday purchased Barney’s Casino in Lake Tahoe and reopened an expanded property called Bill’s Casino. In August of 1988, Harrah’s Laughlin opened. All properties in the Harrah’s group were successful at the time. In 1988, Bass PLC purchased Holiday Corporation.
A New Promus
Promus Corporation was formed as a corporate portion of Bass PLC, which included Harrah’s, Homewood Suites, Hampton Inn, and Embassy Suites. As new jurisdictions in the United States accepted casinos, Harrah’s opened a new casino in Joliet, Illinois late in 1993. Other casinos quickly followed including properties in Vicksburg, Tunica, Black Hawk, Central City, Shreveport, North Kansas City, and Queen Creek (Phoenix).
The new casinos capitalized on Harrah’s existing player data from Nevada and New Jersey and led the way to a new name, Harrah’s Entertainment Incorporated. Harrah’s was 16 casinos strong by that time in 1995. Harrah’s marketing expanded to include a company-wide player’s club system offering comps and promotions at all properties.
As the company expanded to new locations, it also purchased existing properties such as Harvey’s Casino at Lake Tahoe, the Rio in Las Vegas, and even Binion’s Horseshoe in downtown Vegas.
Online poker and televised events like the World Poker Tour brought the exciting game to the masses and helped Harrah’s finance yet more acquisitions and expansions. And, they continued to expand well beyond their financial safety zone. Still, it wasn’t enough for COO Gary Loveman, who became CEO in 2003 and helped engineer the largest gaming purchase in the world two years later.
As MGM Mirage and Mandalay Resort Group worked towards a merger of Kirk Kerkorian’s casinos and those owned by Steve Wynn, Loveman worked out a $10.4 billion purchase of Caesars Entertainment. The purchase gave Harrah’s 40 casinos and the best known, high-end name in the business, Caesars.
To that end, Harrah’s became Caesars Incorporated and acquired London Clubs International in 2006 and Macau Orient Golf Club in 2007. Company debt continued to climb as Caesars purchased Bourbon Street, Barbary Coast, Planet Hollywood, and the Imperial Palace on the Las Vegas Strip.
The Buck Stops at Bonderman
Under a crush of expensive debt, Loveman contacted private-equity wizard David Bonderman about a buyout. In January 2008, Apollo Global Management and TPG Capital acquired Harrah’s.
The combined company was saddled with $25.1 billion in debt.
Regardless of financial situations, the company moved forward by taking their three adjacent properties on the Las Vegas Strip (Flamingo, O’Sheas, Imperial Palace) and forming The Linq. It is now a 2,640-room hotel, casino, and shopping promenade with the High Roller, a 550-foot-tall observation wheel.
Very cool, very high.
Let’s Go with Caesars Entertainment Corporation
In November 2010, Harrah’s Entertainment Inc changed their corporate name because they believed Caesars provided better international name recognition. Perhaps. We’d only add that the Harrah’s name was 30-years older. Who knows?
Two years later, desperate for cash, an initial public offering on the NASDAQ stock exchange took place with the symbol CZR. Then, in early 2015, the casino portion of the company filed for Chapter 11 bankruptcy.
Today, Caesars Entertainment includes several casino brands. They include two Bally’s properties, three Caesars properties, 17 Harrah’s properties, six Horseshoe properties, 16 international properties, and eight other US casino resorts.
Bill Harrah passed away in 1978 at the age of 66, a casino impresario who brought tighter controls, better working conditions, and name brand recognition to a relatively new gaming industry in Nevada.
Today, Caesars Entertainment employs 33,000 workers, has $4.7 billion in annual revenues, and $12.2 billion in assets.
Pretty nice for a company that endured a first gaming operation in Reno that only lasted 17 days.