The subject of today's Fool on the Street is casino giant Harrah's Entertainment (NYSE:HET). Harrah's is easily the most geographically diverse of the casino operators, and through its acquisitions of Horseshoe Gaming and Caesars Entertainment over the past few years, the company has gained leading positions in key markets in the Midwest and South, including Chicagoland, Tunica, and Biloxi, while establishing strong positions in the Las Vegas Strip and Atlantic City markets. Las Vegas and Atlantic City, in fact, now account for 60% of the company's cash flow. Earlier this month, in an effort to expand its international presence, Harrah's also announced an offer to acquire U.K.-based casino operator London Clubs International.

Last week, Harrah's CFO Jonathan Halkyard presented at Bank of America's 36th Annual Investment Conference. The transcript was provided by StreetEvents, and the webcast for the presentation is still available on Harrah's website. We'll start with some of the key points of the presentation, then move on to some quotes from the Q&A session.

The brands
In Halkyard's words, "The company has a foundation of four casino brands, all linked together by one brand, which is our loyalty program: Total Rewards." The four brands are as follows; comments are mine.

  • Harrah's: The retail brand.

  • Horseshoe: The quintessential gamblers brand. The four Horseshoe-branded riverboat properties are all the best casinos in their respective markets. The hallmarks of the brand are the best odds, highest limits, generous comps, and good food. The recently rebranded Horseshoe Council Bluffs racino has led the Council Bluffs gaming market (near Omaha) since its introduction this past spring.

  • Caesars: The luxury international resort brand. Caesars-branded properties include the flagship hotel/casino on the Las Vegas Strip and in Atlantic City. A third property, Caesars Indiana near Louisville, will soon be rebranded as a Horseshoe casino/hotel. Last December, the company announced a $1.6 billion project, along with Starwood and BahaMar Resorts, to open a Caesars hotel in Nassau in the Bahamas.

  • World Series of Poker. The acquisition of the World Series of Poker has made Harrah's a giant in the poker world. Not only does Harrah's now run the largest poker tournament in the world, but the company has created the WSOP Circuit, bringing smaller tournaments to drive traffic to its regional properties as well. As a matter of fact, I'm in Tunica at this very moment, taking in the side action as the WSOP Circuit is being held at Harrah's Grand Casino.

Total Rewards
Harrah's Total Rewards player loyalty program is by far the most advanced of its kind. Harrah's now has 40 million U.S. adults in its Total Rewards database, a quarter of whom have been active over the past year. Combined with Harrah's wide geographic footprint of nearly 40 casinos, the Total Rewards program gives the company a powerful competitive advantage.

Let's say you've earned Harrah's Diamond Card, the highest advertised tier. (There's a secret fourth tier for even bigger players, called Seven Stars.) Not only can you use the comp points you've earned at your local Harrah's-owned casino in Las Vegas, but you've also already gained access to the Diamond Lounge of any Harrah's-owned property. So if you spend a lot of time (or any time, really) visiting casinos outside of your home market, and you have a sufficient gambling budget, the incentive for you as a gambler is to earn the Diamond Card at Harrah's rather than, say, a rival such as Ameristar (NASDAQ:ASCA). Moreover, once you travel away from your home market, the incentive for you -- all else being equal -- is to spend time in a Harrah's-owned property, where you already have usable comp points and VIP access to the Diamond Lounge.

So not only does Harrah's win action away from its competitors in home markets, but it also get loyal customers to spend more time in its casinos in the destination markets as well. The company points out that EBITDA in Las Vegas grew 17% in the second quarter, thanks in large part to the inclusion of the former Caesars properties in the Total Rewards program.

Development and acquisitions
With the acquisitions of Horseshoe and Caesars, Harrah's has substantial domestic redevelopment opportunities. In the near future, the company is expected to announce master plans for the Las Vegas Strip and Atlantic City. In the meantime, the company will be replacing the legacy riverboat at Horseshoe Hammond (in Chicagoland) with a new barge playfully dubbed MOAB (Mother of All Boats), featuring 120,000 square feet of gaming space. "It's a barge by name only," Halkyard says.

The company is also working on a $1 billion project in Biloxi, and adding a new 1,000-room hotel to its Harrah's Atlantic City property. Earlier this month, the company opened Harrah's Chester, a racino near Philadelphia, at which the company will add 2,750 slots in January.

Outside the U.S., the company has two development projects in Europe, along with the aforementioned project in the Bahamas. A successful acquisition of London Clubs would give Harrah's six properties in the U.K., with another five under development.

From the Q&A
A couple of quotes from the Q&A, and then we'll call it a day. Here's CFO Jonathan Halkyard on the impact that gaming in Pennsylvania will have on Harrah's Atlantic City properties, consumer trends, and the promotional environment in Atlantic City:

  • "My view is that when fully ramped -- and that will take some time -- the Pennsylvania gaming will have an impact on revenue [of] probably 5% to 10% on the Atlantic City market. I expect two things that I'll add to that. One is that I think our properties should do better than that, because we have the ability to market in a very surgical market to our customers. And secondly, it will take some time for Pennsylvania to build the supply."
  • "In terms of the consumer market, when there is weakness, it tends to be in the lower-spending customers who are traveling a greater distance to our properties, and it stands to one's intuition that these are the customers who are spending $50 or less in the casino and driving or even flying."
  • "The promotional environment in Atlantic City has certainly intensified in August. I understand we're being blamed. I blame Borgata [a joint venture of MGM Mirage (NYSE:MGM) and Boyd Gaming (NYSE:BYD)], and everybody blames Resorts and Trump (NASDAQ:TRMP). So it certainly has been promotional there. I don't understand really why; the product in Atlantic City is as good as it's ever been."

Place your bets.
Whether or not it's the most lovable casino operator in the game, Harrah's is probably the safest bet as the most geographically diverse, and it's the only one with investment-grade debt -- as the company will gladly point out. Despite being the biggest of the casino operators, Harrah's still has a substantial development pipeline, both domestically and abroad. The Total Rewards program offers a relatively significant competitive advantage. Really, the only knock on the company is its inability to break into the lucrative Asian markets, and even then, it's probably only a matter of time.

One last note: Unlike many firms, investor presentations for most of the companies in the gaming industry are made directly available on the companies' websites for outside investors such as you and me. For example, casino operators such as Wynn Resorts (NASDAQ:WYNN), MGM, Boyd, Station Casinos (NYSE:STN), Penn National Gaming, and Pinnacle Entertainment (NYSE:PNK), and slot manufacturer International Game Technology (NYSE:IGT) -- among others -- all have their investor presentations available in PDF format on their websites. If you're just getting acquainted with the industry or a particular player in it, I believe these presentations (in addition to our coverage of the gaming industry at the Motley Fool, of course!) are excellent places for individual investors to start their research.

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Fool contributor Jeff Hwang owns shares of International Game Technology and Ameristar Casinos. The Fool has a disclosure policy.