CLEVELAND, OHIO – July 28, 2010 – Harrah’s Entertainment, Inc. today announced that it has completed the acquisition of Thistledown race track in Cleveland, Ohio.

“With this acquisition, Harrah’s Entertainment looks forward to enhancing the guest experience at Thistledown–through continuing the long history of thoroughbred racing and providing our support for the Ohio Lottery’s efforts to bring video lottery terminals to the track,” said Peter E. Murphy, president of strategy and development, Harrah’s Entertainment.  “Harrah’s has a long history of maintaining high standards in the gaming industry.  We look forward to continuing our commitment to our guests, employees and the community in this new Cleveland operation.”

 About Harrah’s Entertainment

Harrah’s Entertainment, Inc. is the world’s largest provider of branded casino entertainment. Since its beginning in Reno, Nevada, more than 70 years ago, Harrah’s has grown through development of new properties, expansions and acquisitions, and now operates casinos on four continents. The company’s properties operate primarily under the Harrah’s®, Caesars® and Horseshoe® brand names; Harrah’s also owns the World Series of Poker® and a majority interest in the London Clubs International family of casinos. Harrah’s Entertainment is focused on building loyalty and value with its customers through a unique combination of great service, excellent products, unsurpassed distribution, operational excellence and technology leadership. Harrah’s is committed to environmental sustainability and energy conservation and recognizes the importance of being a responsible steward of the environment. For more information, please visit www.harrahs.com.

This release includes “forward-looking statements” intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. You can identify these statements by the fact that they do not relate strictly to historical or current facts. These statements contain words such as “may,” “will,” “project,” “might,” “expect,” “believe,” “anticipate,” “intend,” “could,” “would,” “estimate,” “continue” or “pursue,” or the negative or other variations thereof or comparable terminology. In particular, they include statements relating to, among other things, future actions, new projects, strategies, future performance, the outcomes of contingencies and future financial results of Harrah’s. These forward-looking statements are based on current expectations and projections about future events.

Investors are cautioned that forward-looking statements are not guarantees of future performance or results and involve risks and uncertainties that cannot be predicted or quantified and, consequently, the actual performance of Harrah’s may differ materially from those expressed or implied by such forward-looking statements. Such risks and uncertainties include, but are not limited to, the following factors, as well as other factors described from time to time in our reports filed with the Securities and Exchange Commission (including the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained therein):

• the impact of the company’s significant indebtedness; 
• the effects of local and national economic, credit and capital market conditions on the economy in general, and on the gaming and hotel industries in particular;
• construction factors, including delays, increased costs for labor and materials, availability of labor and materials, zoning issues, environmental restrictions, soil and water conditions, weather and other hazards, site access matters and building permit issues;
• the effects of environmental and structural building conditions relating to our properties; access to available and reasonable financing on a timely basis;
• the ability to timely and cost-effectively integrate acquisitions into our operations;
• changes in laws, including increased tax rates, smoking bans, regulations or accounting standards, third-party relations and approvals, and decisions of courts, regulators and governmental bodies;
• litigation outcomes and judicial actions, including gaming legislative action, referenda and taxation;
• the ability of our customer-tracking, customer loyalty and yield-management programs to continue to increase customer loyalty and same store sales or hotel sales;
• our ability to recoup costs of capital investments through higher revenues;
• acts of war or terrorist incidents, severe weather conditions or natural disasters;
• abnormal gaming holds; and
• the effects of competition, including locations of competitors and operating and market competition.

Any forward-looking statements are made pursuant to the Private Securities Litigation Reform Act of 1995 and, as such, speak only as of the date made. Harrah’s disclaims any obligation to update the forward-looking statements. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date stated, or if no date is stated, as of the date of this press release.

Contact:  Jacqueline Peterson
702 494 4829
japeterson@harrahs.com

During the ongoing controversy in Kentucky over the legalization of slot machines (aka video lottery terminals), people inside and outside of the horse racing and breeding businesses have pondered how a responsible state government could stand by while its flagship industry is left to deteriorate—and cause the loss of thousands of jobs, tax revenues, and tourist dollars. It certainly is a modern example of Nero fiddling while Rome is burning.

One does not have to look very far to find the explanation. The hard evidence is contained  in a recent document titled “America’s Top States for Business 2010—A CNBC Special Report.” Following is CNBC’s methodology:

“We scored all 50 states—using publicly available data—on 40 different measures of competitiveness. States received points based on their rankings in each metric. Then, we separated those metrics into the ten broad categories, with input from business groups including the National Association of Manufacturers. We weighted the categories based on how frequently each is cited in state economic development marketing materials.

Here are the ten categories ranked in our study: cost of doing business; workforce; quality of life; economy; transportation & infrastructure; technology & innovation; education; business friendliness; access to capital; cost of living.”

Overall, in 2010, Kentucky ranked 40 out of 50 states, making it one of the most inhospitable jurisdictions to do business. Moreover, the Commonwealth is getting worse rather than improving: it ranked 34th in 2009. While Kentucky did very well on three criteria (cost of doing business, transportation & infrastructure, and cost of living), it ranked mediocre to poorly in the other seven categories.

According to CNBC, Kentucky has an unemployment rate of 10.4 percent, a projected 2011 budget deficit of $780 million, and ranks 37th in education. Kentucky’s elected leaders’ answer to this predicament is apparently to become even more anti-business: On CNBC’s criterion of “business friendliness,” the Commonwealth ranked 39th of 50 states, down from 31st in 2009. The CNBC study defined business friendliness as “the perceived ‘friendliness’ of [a state's] legal and regulatory frameworks to business.”

It is of little solace to people in the Kentucky horse racing and breeding industry to know that they are not alone in the way state government has treated them—the state’s elected officials, as a group, are hostile to business per se. They are largely inhibitors and destroyers of economic activity, job killers rather than job creators. Reminds me of Green Bay Packers’ right tackle Henry Jordan’s quip about legendary Coach Vince Lombardi: ”He’s fair, he treats us all the same–like dogs.”

Senate President David Williams has been getting too much credit/blame for his antipathy toward racing. Although Williams is culpable, he evidently has plenty of vocal and silent co-conspirators in Kentucky government from both political parties. He did not make Kentucky so anti-business by himself and this kind of negative climate has been generations in the making. Kentucky should have had racetrack slots many years ago, so there is a lot of blame to go around to current and former elected officials in Frankfort. In my research, I can find no other case of where a state government worked against the economic interests of its signature industry.

No doubt the spin out of Frankfort will be that the CNBC report is flawed.  Judge for yourself the next time you see that a Kentucky racetrack has cut purses, or read of a trainer moving his or her stable to a racino venue, or see that a stallion is being relocated from Lexington to another state with better incentives.

By the way, two other historically prominent but currently troubled racing states–New York and California—rank 45th and 49th, respectively, on “business friendliness.”

Copyright © 2010 Horse Racing Business

Click here to see “America’s Top States for Business 2010—A CNBC Special Report”

In the January 2, 2010 edition of Horse Racing Business, the topic was “Outlook for 2010,” which was an analysis and forecast of the U. S. economy in the upcoming year, as well as an assessment of how the racing and breeding industry would fare. Following are two paragraphs from the analysis:

“The best estimate here is that the U. S. economy will slowly recover in 2010. Here’s why I say slowly: The consumer, whose spending accounts for about 70% of GDP, is still generally scared for his/her job or is out of work. The individual’s house may be under water in that the mortgage exceeds the dwelling’s worth in the marketplace. This negative wealth effect provides neither the capability nor the inclination to spend. These factors, coupled with misguided government policies of out-of-control spending, almost assuredly higher tax rates to pay for it, and an increasing reliance on China to buy U. S. debt, portends trouble four or five years out. Even if there is a fast recovery in GDP and employment, it may be short-lived once the Congress and the Federal Reserve take away the punch bowl of colossal spending and easy money.

Anyone running an equine-related company can look to the future with hope, but hope is not a strategy. Incorporate into your plans a lukewarm-growth scenario (perhaps 2.5%- 3% GDP for 2010 and a year-end unemployment rate of 8%) with a high probability of occurrence. Anything better will be a pleasant surprise, and you will still be in business.”

At mid-year, this evaluation is on target, except that the unemployment rate is about 9.5%.

Economic prospects for the remainder of 2010 look to be mediocre. The unemployment rate is stubbornly high and the current 9.5% metric is misleading. Many people have given up looking for full-time jobs, which means that they are not counted as being unemployed. Others are underemployed in jobs they would normally be too qualified to fill. Credit scores for millions of people in the United States have hit new lows. FICO, Inc. data reveal that 25.5 percent of all consumers—or close to 43.4 million individuals—currently have a credit score of 599 or less. The U. S. home market is very fragile and things do not look set to improve much anytime soon.

Companies are flush with cash (an estimated $1.8 trillion on their balance sheets), but they are understandably reluctant to hire new employees because the president and the congress are doing little or nothing to assuage concerns about what 2011 will bring in terms of taxes and regulation. Strong anti-business rhetoric and legislation is coming out of Washington and protectionism is finding favor. Moreover, the Bush tax cuts will expire on December 31, 2010 and there is uncertainty among individuals and company leaders about whether Washington will permit the greatest tax increase in U. S. history to proceed. Raising taxes in a period of tepid economic growth is a poor idea. Finally, the American public has lost confidence in Washington’s willingness to cut spending to mitigate runaway budget deficits. One possible bright spot is that Treasury Secretary Tim Geithner told CNBC the Obama administration “hopes” to have a 20 percent tax rate on dividends and capital gains. But the word “hopes” itself creates doubt.

All of this confusion causes businesses and consumers alike to be more cautious. The renowned late economist Milton Friedman is responsible for the permanent income hypothesis, which, boiled down to its essence, says that consumers make choices based on their long-term income expectations, rather than on current income. With so much job insecurity among people working, coupled with high unemployment, the remainder of 2010 looks to be stagnant from the standpoint of economic activity.

The second-quarter corporate earnings that have been released this week are overall better than expected, although the reason is more cost containment than top-line growth in revenues.  However, key economic indexes such as manufacturing and retail sales indicate that the economy is losing steam. Yesterday’s release of the University of Michigan’s Survey of Consumer Sentiment revealed that consumer optimism plunged in early July to its lowest level in 11 months, from 76 in June to 66.5 in July.

The Federal Reserve said this week that economic activity for the remainer of 2010 will be lackluster and that it will take 5 1/2 years to again reach a 5.5 percent unemployment rate. Prudent businesspeople will proceed accordingly, especially in an industry like racing wherein so much of the spending that supports it is discretionary.

Copyright © 2010 Horse Racing Business