On Thursday, Harrah's Entertainment (NYSE:HET) announced a $550 million expansion project at its Harrah's-branded property in Atlantic City. The project involves the addition of a 172,000 square-foot retail and entertainment complex, with a new spa, buffet, nightclub, and coffee shop. This part of the project is expected to be complete by the end of 2006. The casino will get an additional 400 slot machines and 20 table games (the property currently has just under 4,000 slot machines with 100 table games).

But the centerpiece of the project will be a new 964-room hotel tower, which will expand Harrah's AC's room capacity by 60%. The hotel is expected to open in 2008.

The expansion is part of a larger makeover across the Atlantic City market, as Atlantic City transforms itself into a truer-destination gaming market. With racinos in New York on the way some time next year and seven racetracks, five slot parlors, and a couple of resorts in Pennsylvania adding from 37,000 up to 61,000 slot machines over the next few years (see The Magnitude of Pennsylvania's Slots), the Atlantic City market will face increasing competition for local business.

Meanwhile, the expansion will help Harrah's better compete against Boyd Gaming (NYSE:BYD) and MGM Mirage's (NYSE:MGM) market-changing Borgata resort next door. Competitors Trump and Aztar have relocated and are beginning to renovate and expand their properties, as well.

But it's not just competition, either -- it is also demand vs. limited room supply in the market. I'll put it this way: I can't think of another place in the country where you can spend $128 a night to stay at a Motel 6.

WPT: Worth more than zero?

I tend to think of myself as being mostly indifferent with regard to WPT Enterprises (NASDAQ:WPTE), the company behind the World Poker Tour television show. But the stock has been in a freefall since Doyle Brunson's supposed takeover bid pushed the stock up to a high at $29.50 this past summer. And watching the stock hit a new low yesterday at $6.15, I just can't help but think that the stock has got to be worth more than zero.

It's Harrah's World Series of Poker vs. the World Poker Tour all the way around. But WPT is hardly alone in this battle -- its business partners have a stake in its success, as well. Really, it's Harrah's vs. everybody else on the casino front, including rival MGM Mirage, which hosts several WPT events at Borgata, The Mirage, and Bellagio. And on the slot machine front, it's International Game Technology's (NYSE:IGT) WPT slots vs. WMS' upcoming series of WSOP slot machines. On the video game poker front, it's Take-Two's WPT vs. Activision's WSOP-branded game.

In addition, WPT Online -- the company's new online gaming site and the key to the stock's upside -- now has IGT as a business partner, with the latter company's recent acquisition of WPT Online partner Wager Works.

And don't let WPT's past couple of quarterly earnings (or lack thereof) fool you: There's a legitimately profitable business here.

Last week, the company posted a wider-than-expected third-quarter loss of $1.6 million, or $0.08 per share, vs. the analyst expectation for a loss of $0.05 per share. The company also forecast light on fourth-quarter revenues, as its guidance of $4.5 million to $5 million in revenues was well short of the $8.5 million analyst estimate at the time.

WPT has taken a shot in the foot in a dispute over its Professional Poker Tour series with the Travel Channel (see WPT's PPT Saga), which airs the WPT show. As we discussed back in September, WPT had already shot its first season of the PPT and recorded expenses for the episodes, but negotiations for the series broke down between the two parties. And apparently, WPT had a three-year deal in place with Disney's ESPN for the PPT. At that point, the Travel Channel stepped in and interfered with the deal by threatening suit. WPT countered by filing suit itself against the Travel Channel back in September.

But as a result, WPT now doesn't expect to derive domestic license revenues from the PPT in the fourth quarter. Instead, the PPT will air internationally and be used as advertising for WPT Online. Still, product licensing revenues were up 481% to $930,000 in the quarter. WPT Online generated $175,000 in revenues its debut quarter, and with marketing spending picking up, is expected to do $225,000 to $275,000 in revenues in the current fourth quarter.

And despite its shortcomings, analysts still expect the company to earn $0.39 per share next year.

Pinnacle breaks ground in St. Louis

Along with its earnings release, Pinnacle Entertainment (NYSE:PNK) announced that it had broken ground on its second property in St. Louis -- a $375 million project that will stand alone in the south end of the St. Louis market once it opens in 2008. The River City Casino & Hotel will have 3,000 slot machines, 60 table games, and a 100-room hotel, as well as a bowling alley, a movie theater, an indoor ice rink, and a 280,000 square-foot retail center.

Interestingly, Pinnacle hasn't committed to rebuilding its damaged casino in Biloxi and may in fact "rebuild" that property in St. Louis with the insurance proceeds from Hurricane Katrina.

Pinnacle also broke ground on a $400 million project in downtown St. Louis back in September and expects that casino to open sometime in 2007. Upon opening, the two casinos will spread out a St. Louis market that is currently dominated by Ameristar Casinos (NASDAQ:ASCA) and Harrah's Entertainment, with their properties approximately 20 miles west of downtown St. Louis.

And this might surprise casual onlookers, but by then, St. Louis will be one of the top gaming towns in America in terms of casino size, quality, and locations. Unlike some of the other new gaming states, Missouri doesn't have restrictions on size (like Louisiana does) or the number of gaming positions (like Illinois does). Missouri also hasn't restricted licenses to economically deprived areas (like Illinois and Indiana have) -- a condition that also serves to hinder potential results.

Missouri does have a $500-per-two-hour loss limit rule. While it doesn't affect most casino patrons, it does cap high-end business. That said, it's probably just a matter of time before the loss limit gets removed.

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Fool contributor Jeff Hwang owns shares of International Game Technology and Ameristar Casinos.