Taking the Risk Out of Gambling

At Harrah 's casinos, the bettors take all the chances

The business of gambling is exciting new interest far outside Nevada these days; casinos are scheduled to open next year in Atlantic City, N.J., and there is talk of legalizing them in Florida and possibly New York. Starting a casino, however, hardly gives investors a license to coin money, as the owners of some deficit-ridden Nevada operations have discovered: gambling is a fast-paced, cash-heavy business that, like any other, must be tightly run to turn a profit. How tightly, TIME Correspondent John Quirt learned by studying Harrah's, one of the oldest (it celebrated its 40th birthday Oct. 30) and most successful Nevada gaming concerns. His report:

Harrah's approach to managing the chaotic business of gambling is to leave nothing to chance. High above its crowded Reno and Lake Tahoe casinos, where $2 billion changes hands each year, security guards crawl along steel catwalks and watch for cheaters through one-way ceiling mirrors. Near by, cashiers match bingo winners against a computerized list of more than 4,000 cards. Players who switch cards, load dice or pinch bets pose a constant threat to profitability. So does the danger of thievery by employees: to discourage theft, cash from the company's 3,900 gaming tables and slot machines is counted under the watchful eye of closed-circuit television cameras. To prevent overstaffing in the casinos--another potential drain on profits--head counts are taken on the floor every four hours and used to compute the number of employees who will be called for each shift.

Harrah's is literally run by the book. More than 50 operations manuals, written by executives over the past quarter of a century, spell out everything from window-washing policy to the importance of maintaining a businesslike decorum. The company's pit bosses are referred to as administrators, and cocktail waitresses taking orders at the craps tables are instructed to call out, to the bartender, say, "Two double Scotches for C" instead of shouting the word craps. Every effort is made to dispel the rowdy, green eyeshade image of gambling. New croupiers are taught the "theory of craps," while Twenty-One dealers are told to slap their hands and hold them upward when they leave their posts to show that they are not concealing any chips. Department heads are required to write daily reports on customer complaints and answer them by letter or telephone. Other supervisory personnel, meanwhile, prepare nightly lists of high rollers in the house.

While such attention to detail enables top management to monitor every aspect of the business, it also creates a blizzard of paper work. Concedes Chairman Bill Harrah: "The danger is that you can become overorganized and start getting answers and information that you don't really need. It's something we fight all the time." For Harrah, a quiet ex-Californian who owns 84% of the company's stock, fussing over minutiae is a hard habit to break after 40 years. Recently he ordered a hotel restaurant billboard repainted after noticing that the rack-of-lamb dinner on it "looked raw." At 66, though, Harrah has begun delegating more decision making to subordinates. A close friend of many show-business celebrities, he still helps set entertainment policy at the company's two theater-restaurants. Acts containing excessive profanity or political and homosexual jokes are rejected, explains Harrah, "because we can draw plenty of people without them."

That is no idle boast. The 1,600 seats in Harrah's showrooms are almost always filled every night, and top performers sell out nearly a month in advance: a recent John Denver engagement drew 82,000 telephone-reservation requests in a single week. During the fiscal year that ended June 30, Harrah's hotels averaged a high 92% occupancy rate and net profit rose 25% from 1976 to a record $14.6 million on a 13.5% increase in revenues, which totaled $161.6 million. Unlike many casinos in Las Vegas that cater primarily to heavy-spending Eastern gamblers, Harrah's has boosted its earnings--an average of 19% a year, compounded, for more than two decades--mainly by mass-merchandising its casinos and shows. Last year it spent $36 million on promotion and brought in more than a quarter of a million patrons by bus, mostly from nearby California. Acknowledges President Lloyd Dyer: "We are the Safeway of the industry."

The supermarket approach, though, is slowly giving way to a new opulence as Harrah's tries to upgrade the quality of its clientele. Each room at its recently expanded Tahoe hotel cost $100,000 to construct and contains two baths with telephones and miniature Sony TV sets. A similarly posh addition is planned eventually for Reno, where the company faces new competition next year from two large hotels now under construction, the MGM Grand and the Sahara. In still another move designed to boost income, Harrah's has begun manufacturing more $1 one-armed bandits--slot machines that take a dollar to play. They produce higher revenue per pull and are even more profitable than the company's moneymaking nickel and dime slots.

With $50 million in spare cash, Harrah's is starting to search elsewhere for new jackpots. On the drawing board at corporate headquarters are plans for an Australian casino ("They're the gamblingest fools in the world down there," says Dyer) and "Harrah's World," a Disney-like entertainment-gambling complex west of Reno. But the company's aversion to debt and its insistence on rigid controls over the tiniest details of its business mean Harrah's will probably not diversify very fast. The odds are heavy against its opening a casino in New Jersey any time soon.

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