Bill Harrah is less a household name these days than he was a mere ten years ago—for now, at least. Once considered one of the chief pioneers of the modern casino industry, his influence might be at its lowest ebb in decades: the company he founded no longer bears his name, which industry-watchers seem to have all-but-forgotten. But across America, including in Las Vegas, Bill Harrah is suddenly a man whose lessons casino owners will want to study.
William Fisk Harrah came into the gambling business in 1933. Having left UCLA before completing an engineering degree, he bought a bingo operation his father had been running in Venice Beach. Harrah the younger already had firm ideas about how to run a business that appealed better to customers: in this case, he fired the shills and added padded stools, giving players a less intimidating atmosphere that was gentler on the backside.
Harrah’s operation flourished, thanks to him having more faith in what seems a simple understanding—that players who don’t feel pressured socially or uncomfortable physically will be better long-term customers. This principle would guide him for the next forty years, and provide, with some elaboration, the foundation for the Harrah approach to casino operation.
After suffering difficulties with law enforcement (bingo in California at the time was, at best, semi-legal), Harrah moved to Reno, where he opened a small bingo parlor two blocks from Virginia Street, the location of most of the city’s gambling clubs. It failed, as did a subsequent location. It wasn’t until Harrah was able to successfully negotiate the politics of Reno’s insular gambling fraternity that he was able to secure a location on Virginia Street that would develop into a full-fledged casino. Once he did, the sky was the limit, thanks to his unwavering faith in his judgment.
Harrah wasn’t a hands-on day-to-day manager: he hired good people and trusted them to do their jobs. But he did insist on a few basic principles that guided his operation. The first was, as he showed when taking over his father’s bingo joint, an overriding fixation on customer comfort. The second was a merciless standardization of customer service. He believed that guests should have uniform, predictable interactions with employees, and that continued devotion to providing this would inculcate loyalty in a competitive market.
In short, Harrah offered guests a casino that was consistent rather than spectacular—the antithesis of the “only see it here” ethos that built the Las Vegas Strip. His casino might have been humdrum to once-a-year visitors, but it was friendly and accommodating to the repeat gamblers who made up its prime customer base. They might not have the best night of their life at Harrah’s, but they would never have a bad time.
Harrah and his top managers had a distrust, almost a contempt for Las Vegas casinos, and often refused to hire dealers with experience in Las Vegas, claiming they had developed “bad habits” down south. Every employee, through a process called “Harrahrization,” was taught to do things the Harrah way—in their mind, the correct way.
At his death in 1978, Harrah owned two casinos. Two years later, Holiday Inns purchased them and put the Harrah’s name on an in-development Atlantic City project. Under the leadership of Phil Satre, Harrah’s embarked on a campaign of vigorous national expansion that played perfectly to the Bill Harrah playbook: an emphasis on good quality and consistent service rather than flashy design or over-the-top promotions. Critics dubbed the Harrah formula “McGambling,” and the comparison to fast food juggernaut McDonald’s is an apt one. The Harrah way was a perfect adaption to the spread of casinos in the 1990s. Instead of a trip to a casino being a once-in-a-while experience to be enjoyed only in Las Vegas, it became a monthly or weekly excursion. Guests wanted to feel comforted, not wowed. Satre’s adaptation of the Harrah formula to a national context enabled the company to win, in a sense, the expansion wars.
As a leader, Satre was ambitious but cautious. He approved large-scale geographic expansion, but was hesitant to buy or build a second casino on the Las Vegas Strip. He also oversaw the launch of Total Rewards, a national customer loyalty program that sought to deliver the Harrah way—good, consistent service and rewards—in an electronic age.
Harrah’s success under Satre gave it the financial strength to buy properties in many markets, but Satre resisted the temptation to build the kind of lavish resort that Steve Wynn and those who emulated him did on the Strip. The Harrah way said that while guests might walk down the Strip to see an exploding volcano or pirate battle, they would gamble where they got the best service and most consistently-delivered comps.
Satre’s successor, Gary Loveman, eschewed his predecessor’s profitable but unexciting strategy for a massive Strip buying spree that gave the company signature resorts like Caesars Palace but also an unsustainable accumulation of debt that, after a leveraged buy-out, ultimately drove Harrah’s—now renamed Caesars Entertainment—into bankruptcy.
Casino owners in Las Vegas and elsewhere should be looking at the Bill Harrah playbook because the casino market virtually everywhere is “mature” (an investor-friendly euphemism for “saturated).” Visiting a casino is no longer a once-a-year experience for those who like to gamble (with the exception of Hawaii) since casino gaming has proliferated across the nation. You can try to replicate the Bellagio or Venetian in Anytown, USA—if you can get the financing—but what customers really want is a comfortable place to sit and reliable comps.
In other words, the formula that Harrah perfected in Reno and Lake Tahoe, and that Phil Satre adapted in riverboats and reservations across the country, is perfectly suited to the current market.
And there’s one final reason Harrah is a name you should know. Wynn Resorts just appointed a new chairman: Phil Satre, the man who twenty years ago took the Harrah way nationwide. When the former apostle of consistency is handed the reins of an empire built on “wow,” the smart money should be able to tell which way the wind is blowing.
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