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I have pity for the Harrah’s General Managers that must contend with old and uncompetitive slots and thinning carpets.  Unkempt casinos wear pretty quickly with the tremendous volume of visitors.  This seems to be happening at an accelerated pace at Harrah’s casinos across the country.  Casinos should spend 5-6% of their revenues (including slots) in maintenance Capex.  I estimate Harrah’s is spending 1-2%.  Compounding the problem for Harrah’s is its (formerly) stellar reputation for well maintained properties.

Harrah’s competitors should continue to steal share.  The following chart details Harrah’s major competitors and the percentage of their EBITDA derived from properties competing with Harrah’s.  ASCA is the clear winner with 74% of its property EBITDA generated at properties in direct competition with Harrah’s.  PNK, BYD, and PENN also maintain significant exposure to Harrah’s at 44%, 34%, and 33%, respectively.