If you think Macau’s concessionaires are going through a tough time at the moment, spare a thought for former giants of the casino business Caesars Entertainment. Once renowned as the biggest owner, operator and developer of casinos in the world – with their flagship Caesars Palace property an icon of the Las Vegas Strip – Caesars has instead spent the past decade digging so many holes for itself that its biggest division was forced to file for bankruptcy in January with debts totaling more than US$18 billion.
Caesars Palace in Las Vegas
Yet it’s hard to feel too sorry for a company that refuses to learn from past mistakes. Not content with the endless stream of bad decisions that have littered its recent history, it turns out Caesars is now investing US$126 million in a convention center in Atlantic City – the same Atlantic City that saw five casinos close in 2014 alone and gaming revenue halved since its heyday in 2006.
The plan, according to Caesars, is to lure a bigger portion of the Northeast’s US$16 billion MICE business to Atlantic City, which sounds good in theory but upon closer inspection falls down in two key areas. One, Atlantic City isn’t the glitzy destination it once was so luring more business types there will be no easy task. And two, Caesars has demonstrated time and again that the only decisions it is familiar with are the wrong ones – particularly during Gary Loveman’s lengthy stint as CEO.
Loveman was in charge of Harrah’s back in 2001 when it failed to even submit a proposal for a Macau license, then in 2006 – after Harrah’s took control of Caesars – managed to make the same mistake again when he knocked back the chance for a Macau subconcession. Ironically, in 2010 Loveman finally acknowledged those decisions as “the biggest mistake the company has made” but of course by that stage the ship had well and truly sailed.
The once thriving Atlantic City
The result is that Caesars now find themselves in US$18 billion of debt while Macau’s casino operators complain that gaming revenue in 2014 was “only” US$44 billion.
But you reap what you sew. Despite missing the opportunity of a lifetime in Macau and overseeing the company’s debt blowout, Loveman managed to hold onto his position for well over a decade until he stepped down only last month.
He also helped expand their casino holdings from 15 in 2003 to well over 50 today, yet incredibly not one of those is located in Asia where fellow American companies like Las Vegas Sands have made their fortune. Talk about missing the boat.
They say the house always wins, but it seems that Caesars has had too much gamble for its own good.
