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Milking the World Series of Poker

By Jeff Hwang - Updated Nov 16, 2016 at 4:45PM

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Owning the World Series of Poker has been a major competitive score for Harrah's.

"Win a seat at the 2005 World Series of Poker -- on us!"

I think that Harrah's Entertainment (NYSE:HET) and Disney's (NYSE:DIS) ESPN have done a superb job of tastefully sucking every last ounce of value out of the World Series of Poker (WSOP). I mean it.

Zillions of people everywhere have been watching the coverage of the 2004 WSOP on ESPN on a weekly basis since the episodes began airing on July 6 (see Playing on Poker's Draw). And by covering almost every event of the WSOP and dedicating 10 hours over a span of five weeks to the championship No Limit Hold'em tournament alone, ESPN has successfully capitalized on and accentuated the fact that the World Series is by far the biggest event in poker.

That's so true that ESPN had just aired the final two hours on Tuesday night, and to milk them some more, those episodes have already been replayed on ESPN and ESPN2 about a dozen times.

And then there's Harrah's.

So last night, I get an email from Harrah's titled "World Series of Poker." The tagline of the email is, "Win a seat at the 2005 World Series of Poker -- on us!" The link directs the recipient to the Web page for the new poker room at Harrah's St. Louis (Maryland Heights).

Now if you've followed my coverage of the gaming industry to any extent, you know how I feel about Harrah's marketing. First of all, I think the emails are brilliant (see The Game of eMarketing). On the other hand, the corporate-run Harrah's of recent years has been anything but friendly to card players, closing down poker rooms in exchange for profit margins, stiffing blackjack players with continuous shuffling machines (see Harrah's Gains, Gamers Lose), and tricking similarly unsuspecting low-limit blackjack players by offering an unplayable 6:5 "Single-Deck Blackjack" game and marketing it as the classic single-deck game (see Casinos Get Greedy).

But poker is back in vogue, and Harrah's is now leveraging itself as the proud owner of its holy grail, the World Series. Harrah's has been opening new card rooms and reopening once-closed ones in markets (including St. Louis; Kansas City; Lake Charles, La.; and Council Bluffs, Iowa, near Omaha). To celebrate, the company brought in last year's world champion, Chris Moneymaker, to play in a single-table tournament with lucky Harrah's patrons, who picked up raffle tickets to get in the game by playing virtually any casino game, including blackjack and Shuffle Master's (NASDAQ:SHFL) Three Card Poker.

And now Harrah's can offer poker tournaments where the winner gets a seat in the World Series.

This is excellent branding for Harrah's and a nice competitive advantage. Over the past year, the popularity of World Poker Tour Entertainment's (NASDAQ:WPTE) World Poker Tour has spawned a massive surge in the growth of poker play in public card rooms. Up until recently, Ameristar Casinos (NASDAQ:ASCA) dominated the poker play in the Kansas City and St. Louis markets, offering the only card room in Kansas City and the biggest of two card rooms in St. Louis by a 3-to-1 margin. But now, while Ameristar maintains the lead, both Harrah's and Isle of Capri (NASDAQ:ISLE) offer poker in Kansas City.

In St. Louis, Penn National Gaming's (NASDAQ:PENN) soon-to-be-owned and currently bankrupt President Casino downtown has expanded its room from four to 10 tables, and Harrah's now has a 12-table room just minutes away from Ameristar. Back in the winter, Ameristar's $165 buy-in, 100-person monthly tournament would sell out in an hour; the winner gets a $5,000 prize and a trip to the championship at Ameristar Kansas City in December. But now Harrah's is offering the same tournament, but with a higher $200 buy-in (a World Series premium), except that the winner gets $1,000 plus a $10,000 buy-in at the World Series of Poker in Las Vegas.

Hmm, which sounds more appealing?

Harrah's now offers or plans to offer similar tournaments in Lake Charles and Harrah's East Chicago, among others. What's clear is that while poker is still a low-margin game for the casino, the World Series of Poker has proved and will continue to prove to be a major competitive score for Harrah's Entertainment.

For more Fool coverage on topics related to poker and casino marketing, check out:

Fool contributor Jeff Hwang owns shares of Ameristar Casinos.

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