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Chris Jones

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How Technology Can Aid Casinos, From the Mouth of One Converted

26 May 2004

By Chris Jones

LAS VEGAS -- Over the past few years, Harrah's Entertainment President Gary Loveman has shared with any and all who would listen his belief that technology has played a pivotal role in turning around his Las Vegas-based gaming company's financial fortunes.

But the Harvard academic-turned-casino business executive wasn't always sold on the merits of databases and other high-tech tools, Loveman told an audience Tuesday at the Gaming Technology Summit at Green Valley Ranch.

While attending the Massachusetts Institute of Technology in the mid-1980s, Loveman studied whether there was any measurable correlation between a business' technology investments and its improved productivity and profitability.

"As it turned out, there was no connection," Loveman said of those early results, which were limited largely by business leaders' then-inability to adapt technology to their companies' day-to-day needs.

Nearly two decades later, Loveman's faith in the business world's use of gizmos and gadgets couldn't be more devout. And he shared his conversion story with more than 100 gaming and technology company representatives in attendance at the summit, which concludes today.

Since he began working with Harrah's in May 1998 -- the past 17 months as the company's president and chief executive officer -- Loveman and a team of nearly 500 information technology specialists have developed several tech-based initiatives that have greatly improved Harrah's bottom line.

"We have recognized that the fuel to grow this business, and differentiate it in terms of greater return on invested capital, is by building what we call `capabilities' " Loveman said.

Those capabilities include Harrah's Total Rewards frequent customer database, a player contact system that allows casino bosses to monitor perks given to big gamblers, as well as Fast Cash, a new cashless machine program that offers real-time incentives to customers based on their ongoing game play.

Fast Cash is so timely, Loveman said, it can detect a player's losses to the instant, offering free meals or show tickets at key times of day or suggesting that a gambler who has had poor luck at one particular game try playing something else.

"That's like walking into the grocery store and reaching for Heinz ketchup and having the Hunts (ketchup) bottle yell out, `Hey, wait a minute! You always buy me, and I'm on sale,' " Loveman said.

In 1997, Loveman said research showed that Harrah's customers spent only 36 percent of their total gaming budget at the company's casinos. Believing "same-store" growth could be achieved, Harrah's used an aggressive, data-centered marketing and customer care program that last year persuaded the company's customers to spend 43 percent of their gaming dollars at a Harrah's property, Loveman said.

"Thanks to technology, we know enough about our customers to significantly change how they make purchase decisions in our favor," Loveman said. His company's customer database contains more than 28 million names, up significantly from the approximately 10 million members it reported in 1996.

Loveman said Harrah's uses technology for everything from determining which slots should be placed at specific points on a casino floor to ensuring that hotel room rates are discounted for customers who are more inclined to gamble.

"(Through database monitoring) we learn more and more about how to fine-tune the offer to be the most-valuable yet most-profitable to each segment of our customers," Loveman said.

Last year, Harrah's enjoyed net income of $292.6 million, up 24 percent from $235 million in 2002. Cash flow for the year was $1.1 billion in 2003, down $23 million from 2002, while revenue improved by 5 percent to $4.3 billion from $4.1 billion in 2002.

The Gaming Technology Summit is closed to the public.

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