Horseshoe Gaming Holding Corporation Business Information, Profile, and History

Company Perspectives:

Jack Binion has been a casino operator for 45 years so he has a pretty good idea what makes a gambler tick. It's nothing sophisticated and it's no great secret: Jack puts the customer first. His personal approach to all his guests is unique in the gaming industry. You see, the bottom line for Jack is not calculated in dollars and cents, but rather by satisfied gamblers who feel the same rush from big action that he does. When you're at a Horseshoe Casino, you're a guest of Jack Binion and he wants to make sure his guests are having a great time, and a great game. Jack doesn't stop there. At Horseshoe, you will find a variety restaurants to suit your tastes, luxurious accommodations, nightly entertainment, gift shops, and specialty shops. You'll find Jack, too. His hands-on style creates friendly and familiar atmosphere that is a welcomed feature at each Horseshoe Casino.

History of Horseshoe Gaming Holding Corporation

Horseshoe Gaming Holding Corporation is one of the largest privately held gaming companies in the United States. The company owns and operates three river-based casinos: the Horseshoe Bossier City on the King of the Red riverboat across from downtown Shreveport in Louisiana; the Horseshoe Casino Center in Robinsonville, in northern Mississippi; and the Horseshoe Casino Hammond, in Hammond, Indiana, southeast of Chicago. With more than 137,000 square-feet of gaming space at the three casinos, Horseshoe Gaming offers patrons more than 5,000 slot and video poker machines, and over 185 game tables, including craps, blackjack, Caribbean stud, roulette, baccarat, and poker. Company founder Jack Binion attributes the success of Horseshoe Gaming casinos to his philosophy of presenting customers with exciting gaming opportunities by providing "the best odds, the highest limits, and the biggest jackpots." The company operates hotels at the Bossier City and Robinsonville properties, providing luxury accommodations and amenities, as well as meeting facilities and banquet rooms. All properties provide dining at American and Asian restaurants, at an international buffet, and at a Jack Binion's Steak House. In late 2003, the company announced that it had agreed to be acquired by Harrah's Entertainment for $1.45 billion.

The Founder's Family Legacy

When Jack Binion founded Horseshoe Entertainment in 1993, he brought a lifetime of experience in the gaming business to his ventures outside of Las Vegas. Binion grew up in the gaming business, being groomed for it from a young age by his infamous father, Lester "Benny" Binion. A Dallas mule-trader, Benny gained notoriety as a bootlegger and the operator of a floating craps game. In 1947, when Jack was ten years old, the election of a new sheriff prompted Benny to leave Texas with his wife and five children. According to legend, Benny left Dallas for Las Vegas with two suitcases containing $2 million in cash.

In 1951 Benny purchased the El Dorado Casino Hotel, known for its display of $1 million cash pasted into a glass case. Located in downtown Las Vegas' "Glitter Gulch," the casino was renamed Binion's Horseshoe Club. Benny Binion operated the casino in a casual, freewheeling style, managing the club from a table in the coffee shop on the casino floor. He emphasized providing pure gambling for serious gamblers, offering no entertainment but providing "good food, good service and a good gamble." He offered excellent gaming odds and accepted all bets without limit. Thus the Horseshoe Club attracted high-rolling, professional gamblers and became one of the most profitable casinos in Las Vegas.

In 1953 relentless Texas authorities convicted Benny Binion for income tax evasion. In addition to serving more than three years in a federal prison, Benny lost his casino license. He sold the Horseshoe Club to a group of investors. A few years later Jack Binion obtained a loan from his mother and bought an interest in the group, eventually restoring ownership of the Horseshoe Club to the Binion family. Jack Binion became president of the company in 1960, at the age of 22. He handled the finances while his more outgoing, younger brother, Ted, managed the casino floor. Benny Binion provided oversight unofficially from his table in the coffee shop.

The Horseshoe Club continued to be among the more profitable casinos in Las Vegas as the Binions invested in providing good gambling, rather than entertainment. In 1970 the Binions initiated the World Series of Poker, an annual event for which the Horseshoe Club became famous. Like the free-wheeling atmosphere of the Horseshoe Club, the event attracted professional gamblers from around the world. While the prize money was collected from players who paid fees to compete, money won at the poker table often surpassed the value of the prize. Large bets and psychological maneuvering added suspense and intrigue to the event. Though the tournament evolved to include a variety of poker games, the variation known as Texas Hold 'Em determined the winner. After the ante, betting began when the first two cards were dealt, face-down, and continued with each additional card dealt, face-up, for a five-card hand.

During the late 1980s, Benny's health declined, and Ted Binion lost his gaming license amidst allegations of drug use. The Mint Casino next-door to the Horseshoe Club was acquired during this time, thereby doubling the size of the Binion's operation. When Benny died in 1989, Jack Binion held more than half of the shares in the Horseshoe Club, with the balance owned by his mother and his brother Ted. In 1994, Binion's mother died, and her interest in the casino passed to daughter Becky Binion Behnan. After some problems, including a $1 million regulatory fine in 1993 and financial losses in 1994, a dispute over management of the Horseshoe Club arose between Jack and Becky. After a two-year legal battle, Jack decided to sign over his interest in the Horseshoe Club to Becky in 1998. By that time, new gaming venues outside the Las Vegas market held his attention.

Growth Outside of Vegas in the Early 1990s

As legalized gambling expanded outside of Las Vegas, Jack Binion pursued business opportunities in these new markets. In 1993 he had founded Horseshoe Entertainment (later Horseshoe Gaming LLC) for the purpose of operating a riverboat gaming facility in Bossier City, Louisiana. While he used the Horseshoe name (acquiring rights in 1995 before the family dispute), Jack operated the company independently from the family business in Las Vegas. Funded in part by local investors, Horseshoe developed a four-story, 46,000 square-foot paddleboat designed in Victorian style, providing 30,000 square foot gaming area, with 1,060 slot machines and 42 gaming tables, including blackjack, craps, roulette, and Caribbean stud. The Queen of the Red, named for the Red River on which the boat floated, carried 2,200 passengers. A land-based pavilion adjacent to the riverboat offered patrons a choice of a steakhouse or buffet dining, a sports lounge, an ice cream parlor, and a gift shop. The company purchased and refurbished the nearby LeBossier Hotel, which provided 202 guest rooms, an outdoor swimming pool, and the 240-seat Atrium Restaurant. The Queen of the Red opened for business on July 9, 1994, attracting much of its customer base from Dallas/Ft. Worth, Texas, less than 200 miles west.

In February 1995, Binion opened the Horseshoe Casino Center in Robinsonville, Mississippi, on the Mississippi River about 35 miles southwest of Memphis, Tennessee. The first floor of the barge held a casino, also designed in the Victorian style, with 1,022 slot machines, 39 table games, and 10 poker tables. On the top two floors, a hotel provided 200 guest rooms positioned in a horseshoe around a courtyard and swimming pool.

Wherever he opened a casino Binion carried the family legacy of exciting gaming. In August 1994, before opening its Mississippi casino, Horseshoe's outdoor advertising offered the "loosest slots and biggest jackpots." Another ad promoted "single deck 21" for blackjack play with only one deck of cards, rather than the usual practice of play from multiple decks. On craps tables the Horseshoe purported to offer the "best odds and highest limits." The Horseshoe Casino Center stirred competition with established casinos in the Tunica County gaming district with the offer of "10x odds" on craps. This meant that a player could place a bet ten times the amount of the original bet, a major benefit to players at the craps table where the odds of winning are 50-50. Other casinos met the 10x odds, prompting the Horseshoe to offer 20x odds; some competitors followed. The competition over odds generated excitement and attention to gaming in Tunica County, a benefit to all the casinos as the gaming market grew with greater volume of business.

From the beginning Horseshoe Gaming operated the most profitable casinos in their markets. At Bossier City, the Queen of the Red led Louisiana riverboat gaming with $151.2 million in gross casino revenues. Horseshoe recorded $160.7 million in net revenues, including hotel and food and beverage sales, less promotional allowances. Open 322 days in 1995, Horseshoe Casino Center recorded $137.5 million in net revenue. Overall, Horseshoe Gaming LLC, which owned 91 percent of Horseshoe Bossier City and 100 percent of Horseshoe Casino Center, collected $298.2 million in net revenues and earned $53.7 million in pretax income.

During 1996 the company initiated expansion projects at both the Mississippi and Louisiana properties. At Bossier City the company built a 26-story hotel, providing 606 luxury suites with king or queen size beds and marble bathrooms, many with Jacuzzi tubs. The $58 million project included an indoor pool, a health club and spa, retail shops, and three restaurants, including Jack Binion's Steak House.

In August Horseshoe purchased a second riverboat casino for the Bossier City location for $4 million, including land in Chalmette, Louisiana. The company acquired the unfinished riverboat from Circus Circus, which terminated its development project. The cost to finish the project was estimated at $35 million, including moving the boat to Bossier City, with completion expected in one year. Rather than adding a second riverboat casino, Horseshoe decided to replace the existing boat with the new boat, named King of the Red, which provided slightly more gaming space and passenger carrying capacity.

Expansion at Robinsonville involved development of the Bluesville entertainment complex, dedicated to the celebration of blues music. The complex included a 15,000 square-foot casino, housing more than 400 slots and 15 game tables and a 14-story hotel, holding 312 deluxe guest rooms, a health spa, conference rooms and banquet facilities, a 1,100-space parking garage, and a Jack Binion's Steak House and other dining options. The 61 Crossroads Café served southern and Cajun cuisine in a jukejoint atmosphere; an audio and video system played blues music and showed clips about blues musicians. The 1,000-seat Bluesville Performance Club provided space for live musical performances, including local, national, and internationally acclaimed acts in rock, pop, country, as well as blues music. The Blues and Legends Hall of Fame Museum recounted the historical development of blues music and featured guitars, harmonicas, and other memorabilia of renowned blues musicians.

Expanding to the Midwest in 1999

As expansion projects at existing properties came to completion, new projects came to fruition, specifically the pursuit of gaming opportunities in the Midwest. In September 1998 Horseshoe Gaming signed an agreement to acquire Empress Entertainment, operator of riverboat gaming operations in Hammond, Indiana, near Chicago, and in Joliet, Illinois. The Empress Hammond riverboat provided 43,000 square-feet of gaming space, with gambling available at 1,677 slots machines, 55 table games, and 8 poker tables. The Empress Joliet, with 30,000 square-feet of gaming space, housed 1,072 slot machines, 46 game tables, and 7 poker tables. Land-based pavilions at each site housed restaurants and a banquet room. The Joliet site included a 102-room hotel and an 80-space recreational vehicle park.

In preparation for the Empress acquisition, Horseshoe Gaming LLC incorporated in early 1999 as Horseshoe Gaming Holding Corporation, combining and acquiring various interests in the company. In May Horseshoe Gaming obtained funding for the acquisition of Empress Entertainment through a private placement of $600 million in 8 percent senior subordinated notes. Upon approval of the acquisition by gaming regulators in Indiana and Illinois, Horseshoe acquired Empress for $629 million on December 1, 1999.

In an unexpected turn of events, however, in June 2000 the Illinois Gaming Board (IGB) refused to grant a gaming license to Jack Binion for operation of the Joliet Empress, noting several regulatory issues and questioning certain business practices. Binion was stunned as the IGB had approved the acquisition on condition that Horseshoe Gaming move its headquarters to Joliet, which the company did, relocating several key employees and their families. A ripple effect threatened the legal viability of other Horseshoe properties, as well; IGB forwarded a letter about the decision to the Louisiana Gaming Control Board which was considering Horseshoe among several gaming companies bidding for the 15th and final gaming license in that state. Binion asked a judge to give an opinion on the IGB decision before seeking a legal appeal.

In another unexpected change, the Empress Joliet casino rose in value rather dramatically. A law passed in June 1999 permitted gambling at riverboat casinos when docked, not strictly while traveling. The extended gaming time served to increase casino revenues by more than 30 percent. The acquisition of Empress Entertainment nearly doubled Horseshoe revenues to $1 billion in 2000, compared to $525.6 million in 1999. Bossier City accounted for $268.7 million in net revenues in 2000, Robinsonville accounted for $250.6 million, Empress Hammond for $245.5 million, and Empress Joliet for $247.6 million. Revenues were hampered somewhat by disruption from construction, increased competition, and adverse weather conditions.

In January 2001, Binion agreed to sell the Joliet facility and to pay a $2 million fine in Illinois for practices initiated after the acquisition. Argosy Gaming Company purchased the Empress Casino and Hotel in Joliet for $465 million, completing the transaction in August 2001.

Improvements in the Early 2000s

To meet increased competition as well as consumer demand for gaming opportunities, Horseshoe Gaming sought to improve its gaming services. In spring 2000 Horseshoe Casino Center, along with the Gold Strike Casino Resort, introduced the First Annual Jack Binion World Poker Open. The event offered several kinds of tournaments, such as satellites or mini-tournaments, and super satellites, the latter being required play for entrance into the Championship tournament. The play at super satellite events continued until a player at each table won all tournament chips at that table. Winners from different tables then played against each other until one person won at the final round of play.

Improvements at Horseshoe Casino Center involved additional gaming space and upgraded dining options. The company relocated central engineering and a buffet in the casino area to an adjacent building, opening space for 475 slot machines and ten table games in the casino. The buffet was converted to an international theme and expanded to accommodate 650 patrons. The addition of a piano bar and an American grill, called Café Sonoma, completed the improvements. The company also built infrastructure for the possibility of building a 1,000-room hotel tower.

In April 2001 Horseshoe Gaming completed an $11.5 million renovation at the Hammond casino and pavilion and renamed it Horseshoe Casino Hammond. The casino catered to the high-end Chicago market with a luxurious gaming space, featuring marble and wood grain accents and shades of terra cotta, cream, and black. The VIP room provided security personnel outfitted in tuxedos, a private hors d'oeuvre buffet, as well as high limit slots, and a $20,000 per hand limit at blackjack, the highest bet available in the Midwest gaming market. Also, Horseshoe Casino Hammond allowed bets up to $100,000 on Baccarat and 100x odds on craps. The company spent $2.5 million in employee training to improve customer service at the casino. On May 4, 2001, Horseshoe Gaming celebrated the renovation and new name with a grand opening gala event for VIPs and the media, featuring a variety of headline entertainment from around the world. Changes at the Hammond site resulted in a significant increase in revenues at the casino, particularly after dockside gaming opened in August 2002.

Horseshoe Gaming obtained license renewals for all of its properties. In Mississippi, where Horseshoe Casino Center remained the most profitable of 29 casinos in the state, the company was granted license renewal in September 2000. The Indiana Gaming Commission renewed the license for the Horseshoe Casino Hammond in August 2001. The Louisiana Gaming Control Board renewed the gaming license for Horseshoe Bossier City in early 2003.

Horseshoe Gaming casinos continued to operate in the Binion family tradition of providing "good food, good service, and good gaming." In 2003 all of the Horseshoe Gaming properties won recognition in a Casino Player magazine's annual "Best of Gaming" issue. Horseshoe Casino Hammond was named for Best Blackjack, Best Craps, Best Roulette, and Best Baccarat. The Mississippi property was recognized for the Best Hotel Casino, Best Rooms, and Best Suites. Horseshoe Bossier City retained its positions in the Best Hotel, Best Rooms, and Best Hosts categories. That property was named as the Best Table Game Tournaments, Best Shopping, and for two dining categories, Best Seafood, at Jack Binion's Steak House, and Best Chinese, at Four Winds restaurant.

On September 12, 2003, Horseshoe Gaming signed an agreement to be acquired by Harrah's Entertainment, Inc. Several gambling companies expressed interest in acquiring Horseshoe Gaming, such as Ameristar Casinos which sought financing for its offer of $1.3 billion. Harrah's offered $1.45 billion to purchase outstanding stock and assume debt, with no financing required. Completion of the acquisition required approval of gaming boards in Mississippi, Louisiana, and Indiana, as well as a waiting period required by antitrust law. In January 2004, Harrah's announced that it also intended to acquire the troubled Horseshoe property in Las Vegas owned by Binion's sister. As the likely new owner of the Horseshoe properties, Harrah's hoped to profit from that company's good reputation and World Series of Poker tournament renown. The Binions' role in the company's future, however, was uncertain.

Principal Competitors: Boyd Gaming Corporation; Harrah's Entertainment, Inc.; Mandalay Resort Group; Park Place Entertainment Corporation; Pinnacle Entertainment, Inc.

Chronology

• Key Dates:
• 1993: Jack Binion founds Horseshoe Entertainment.
• 1994: Queen of the Red riverboat casino opens in Bossier City, Louisiana.
• 1995: Horseshoe Casino Center opens in Robinsonville, Mississippi.
• 1996: Expansion projects include high-rise hotels and an entertainment complex.
• 1999: Horseshoe completes acquisition of Empress Entertainment.
• 2000: Illinois Gaming Board denies Binion a gaming license for Empress Casino in Joliet, forcing Horseshoe to sell the property.
• 2001: Horseshoe completes luxury renovation of Horseshoe Casino Hammond in northern Indiana.
• 2004: Horseshoe Gaming agrees to be acquired by Harrah's Entertainment.