Caesars Entertainment announced February 4 that Gary Loveman, CEO since 2003, would be stepping down effective June 30. While he will remain as chairman of the board for the foreseeable future, this marks the end of his time as the chief decision-maker of the gambling giant. What kind of legacy will Loveman leave? On one hand, his laser focus on player loyalty helped to build the company into a powerhouse; on the other, that triumph led directly to the company’s current bankruptcy.
Some backstory: Harrah’s Entertainment, the company Loveman joined as chief operating officer in 1998, had its roots in Bill Harrah’s northern Nevada casinos. Harrah had emphasized customer service in his Lake Tahoe and Reno casinos—everyone who walked through the doors was to be treated courteously and cheerfully. His properties might not have the flash of Las Vegas’ pleasure palaces, but they would always be clean, bright and well maintained.
When Loveman landed at Harrah’s, the company had already grown significantly under then-CEO Phil Satre, chiefly by building from the ground up. Its Atlantic City casino was the beachhead for a national expansion that saw Harrah’s casinos in Illinois, Mississippi, Louisiana and North Carolina. These properties were the antithesis of Las Vegas glamour; instead, they focused on middle-income gamblers.
Loveman was a perfect fit for Harrah’s, based on the strength of his academic interest in customer service. And he quickly solved the problem of how to take a company based on personal interactions and scale it up into a national chain: by launching a sophisticated player-tracking and loyalty program. Total Rewards, as the program was ultimately known, was Loveman’s answer to Steve Wynn’s exploding volcano. Players might stop by a casino with an expensive attraction, he argued, but they would stay and gamble at one that rewarded them better. He was right: Humble Harrah’s became a company to watch.
A program such as Total Rewards works better when there are more properties and more players. So the next natural step was to expand Harrah’s reach. However, instead of growing organically by building new casinos, the company began acquiring existing properties at a rate of about one a year: Showboat, Inc. in 1998 (Harrah’s sold the Las Vegas flagship, which foundered as the Castaways and was later imploded); the Rio the following year; Players International, a riverboat owner, in 2000; and Harvey Casino Resorts in 2001.
What had been a small, focused company was now growing. And when Loveman became CEO in 2003, that growth swelled even more. Downtown’s Binion’s Horseshoe yielded the World Series of Poker (and the Horseshoe name) before the company sold it off, while Jack Binion’s riverboat casino operator, Horseshoe Gaming, expanded Harrah’s portfolio in the Midwest. Yet all that paled in comparison to the 2005 acquisition of Caesars (formerly Park Place) Entertainment, which had its own network of regional casinos and a huge presence in Las Vegas and Atlantic City. The company subsequently doubled down on its Strip presence by picking up the Barbary Coast (now the Cromwell), Imperial Palace (now the Linq) and Planet Hollywood.
That certainly was a monster bet on Las Vegas, and at the time it seemed like a wise one: Land prices, visitation and every other indicator were soaring. This big, private equity play that took the company private in 2008—and saddled it with the debt that ultimately drove it into bankruptcy—made sense because of the company’s meteoric growth, which was driven by Total Rewards. It may be the definition of irony: The program that was supposed to help Harrah’s compete without the glamour of its Strip rivals led to it buying the most glamorous name in the industry. The company’s new priorities were crystallized by its 2010 name change to Caesars Entertainment. Clearly, this wasn’t Bill Harrah’s company anymore.
It’s unclear what the next chapter of Caesars Entertainment’s history will bring, but as Loveman steps aside, he will be remembered as the executive who took Harrah’s focus on customer service and turned the company into a 21st century empire—for better and worse.
David G. Schwartz is the director of UNLV’s Center for Gaming Research.