PokerWorks

The economy can be deemed in true recession form when Las Vegas casino empires face serious problems. When times get somewhat rough, many people run off to casinos and resorts in Las Vegas to drown their sorrows and try to win a big jackpot to save everything. But when times present a true recession, bordering on a depression, those getaway destinations suffer, as people are forced to spend their precious dollars on necessities. MGM Mirage knows this and has been bordering on a bankruptcy filing for weeks, and now Harrah’s is looking toward drastic measures to its financial status.

It was more than a year ago that Apollo Global Management LLC and TPG Capital LP bought Harrah’s Entertainment, and the global powerhouse is now reporting outstanding debt in the amount of $24.5 billion. Its most current SEC filing noted that it may be required to sell some assets or restructure to stay afloat. After a multi-billion dollar loss overall in 2008, the owners have begun the process of purchasing second-lien debt with bankruptcy in sight.

The Las Vegas Review-Journal reported that bondholders in Harrah’s Entertainment submitted 57 percent of the notes the company holds, in addition to the $5 billion worth that were already tendered, in an attempt to cover the debt. Harrah’s hopes to issue $2.8 billion in new notes with lower value but higher interest with expiration dates in 2018 in exchange for current notes that expire sooner. All must be sorted out by April 1, 2009, before which Harrah’s plans to make no further announcements.

Analysts say that the Harrah’s financial peril will likely not have an effect on most of its casinos, though some smaller venues are being considered for sale, nor on the World Series of Poker. A bankruptcy will open the company up for restructuring, however, and that situation may require all assets to be reconsidered.

But should the WSOP brand name be available in a possible asset sale, there seem to be numerous bidders in the waiting. With some speculation that the Rio All-Suite Hotel and Casino reportedly on the list of venues on the chopping block, it would make more sense that the sale of the home of the WSOP would prompt Harrah’s to consider its sale as well. Should that happen, the major online poker sites could come out from behind their offshore hideouts and make a play for the WSOP, as the partnering of a site like Full Tilt Poker or PokerStars with the World Series could take the profits of an online site to astronomical levels. In addition, a site with the rights to the WSOP could launch a new online poker site with that brand name, which by all estimates would be a grand success.

As the 2009 World Series of Poker approaches along with the April 1st deadline for Harrah’s Entertainment, many insider eyes will be on the company and its actions going forward. With MGM Grand looking more likely to follow in the footsteps of Station Casinos in Las Vegas, which announced its intent to file for bankruptcy in April, it is likely that Harrah’s will be making some fairly drastic moves in order to avoid the same fate.