Challenging times in casino
February 21, 2003
By Gregory Crofton, Tahoe Daily Tribune
Casino business could be done with a handshake at South Shore in the early 1960s.
Harvey Gross and Bill Harrah were part of the community’s fabric and knew its members well enough to seal a deal that way.
But change came swiftly. By 1973, Harrah’s Club, which included casinos at Reno and Tahoe, was the first gaming company to be traded on the New York Stock Exchange.
Flash forward 30 years, and South Shore is dealing with aftershocks of another groundswell. Harrah’s Entertainment bought its No. 1 competitor at the lake, Harveys Resort Casino, in summer 2001.
Factor in the soaring price of housing at Lake Tahoe Basin and what we have are challenging times as this gaming and resort town strives to become a year-round attraction while providing housing for its work force.
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“They’ve maintained a level of status in the community which recognizes the need to give back,” said Brooke Laine, former mayor of South Lake Tahoe. “I still think there is room for improvement, particularly in the area of affordable housing.”
Some wheels have turned, but not very far. A lack of vacant land and stiff regulations that govern building at the basin make affordable housing projects a financial challenge.
In 2000, Heavenly Ski Resort proposed construction of employee housing on 25 acres it owns near the top of Kingsbury Grade. The resort spoke to Harrah’s about shared use of the housing because their busiest times run opposite each other.
But in February 2001, Douglas County commissioners rejected the resort’s plans because the county does not have a land use category for employee housing and refused to approve the project as multifamily housing, said Andrew Strain, planning director at Heavenly.
A way to resolve the issue would be to deed restrict the property. Heavenly has not decided what it wants to do.
“The ball is in our court at the moment,” Strain said. “Right now with the new owners we’re looking at all options, what makes best sense for the company.” Vail Resorts bought Heavenly a year ago.
Harrah’s Lake Tahoe is also sniffing out possible sites for employee housing. Joe Hasson, general manager of the company, which includes Bill’s and Harveys, said vacant land behind Lakeside Inn & Casino is being considered as a possible location for affordable employee housing.
“There is some land owned by Harveys and we’ve been in discussions looking for approval of community leaders for use of it as affordable housing,” Hasson said. “That discussion is under way and is top of mind for me.”
But Hasson said he is not in the building industry. His business is focused on bringing customers to South Shore.
“I hope the people who build houses, build the houses,” Hasson said. “We’ve been investing pretty heavily at South Shore … and we will continue to do all we can do and more to stimulate visitation.”
Hasson cited $30 million in improvements made at Harveys and Harrah’s since the merger of the two properties 18 months ago. Right now, an $8 million buffet is being constructed inside Harveys.
But what about providing transportation for employees who make their way from Carson Valley to Stateline every day?
Hasson said he would consider the idea, but Harrah’s Lake Tahoe already provides a great deal of transportation at South Shore with its shuttle service.
All of the Stateline casinos, not just the ones owned by Harrah’s Entertainment, have committed vast numbers of shuttles as part of a coordinated public transportation system at South Shore.
TCAT, or Tahoe Coordinated Area Transit, is scheduled to be fully operational by this summer. It will use GPS software to link private and public vehicles, making the system more efficient.
When Harveys and Harrah’s became one, so did its management.
John Packer, a casino spokesman for years at Harrah’s, now represents Harveys as well.
David Moffet, 69, who worked at Harveys from 1961 to 1997, remembers when the staff at Harveys topped out at 2,300. Today, Harrah’s, Harveys and Bill’s combined employ more than 3,000 people; but only during the summer when the gaming business hits its peak.
Gabriela Inigo, who has lived at South Shore for 26 years, six of which she spent working at Harveys, said she has witnessed the impact of the downsizing.
“Hundreds of people were fired with no explanation and no benefits,” Inigo said. “(They went to the Carson Valley) and are finding jobs in Wal-Mart, at gas stations and casinos. Half of the people I used to know in Tahoe are gone.
“The way I see it, people cannot live in Tahoe unless they live two or three families to an apartment. I work with families that are low income. People just don’t make it.”
Statements about staffing baffle Hasson, especially the ones that accuse Harrah’s of increasing the number of people it employs part time.
“We have fewer part-time workers than a year ago,” said Hasson, who began his career at Harrah’s more than 20 years ago with a kitchen job. “That’s a perception not genuinely supported by the facts.”
In 2001, Harrah’s Lake Tahoe employed 330 part-time workers. Last year, it employed 280 and between payroll and benefits paid out more than $100 million to its employees. And, he said, Harrah’s Lake Tahoe retains its employees much longer than other casinos.
“If we weren’t paying competitive wages,” Hasson said, “we wouldn’t have any employees.”
Willie Nelson, George Carlin and the Doobie Brothers routinely play Harrah’s South Shore Room, which seats 800. Big names, but older names.
In the mid-1970s, Frank Sinatra and Sammy Davis Jr. would play two shows a night for a week at Harrah’s and get paid a lump sum. A weeklong stint for Sinatra cost about $200,000, Packer said. Such shows don’t exist today.
Performers can make much more money per show at an arena than they can at a place like the South Shore Room.
“Because of the nature and size of the showroom and inability to build anything bigger because of regulation, we’re kind of priced out of it,” Packer said. “The upcoming superstars, we couldn’t afford them, not with 800 seats.”
But with last summer’s highly successful concert series, which featured stars such as Tim McGraw and Robin Williams, Harrah’s Lake Tahoe has found an outlet for big-name shows.
The weekend events staged in a 5,000-seat area set up behind Harveys were a hit and spurred all types of business at Stateline.
“We got lots of comment from people in town who saw their business go up during the time we had those shows,” Packer said.
This summer, Harrah’s Lake Tahoe plans to increase the number of entertainers it books in July and August. A comedy festival, blues festival and acts tied to the Celebrity Golf Championship at Edgewood Tahoe are scheduled.
When Bill Harrah and Harvey Gross were alive, they gave back to the community. Today, Harrah’s Lake Tahoe still does.
Last year, it donated more than $100,000 to United Way. This is money that makes it into the hands of people in need who live in the Lake Tahoe area, Packer said.
The Stateline casinos also support South Shore by donating meeting space for civic groups and providing lunches at a discount. Last month, Harrah’s Lake Tahoe donated the use of its 20,000-square-foot Special Events Center for a crab feed fund-raiser for Lake Tahoe Sunrisers Kiwanis.
Harrah’s also organizes collections for Christmas Cheer and contributes to Little League and Barton Memorial Hospital. Harrah’s Lake Tahoe last year paid for painting and landscaping at the Sierra Recovery Center and bought a refrigerator for Meals on Wheels.
Harrah’s also donates in-kind goods to charity, such as a two-night stay or a dinner for two. Often the goods sell at silent auctions or they are raffled off, Packer said.
“There isn’t a measurable difference in terms of (the casinos) support for the community,” said Del Laine, a longtime resident and former city councilwoman. “I haven’t seen that slacking off in any way.”
— Gregory Crofton can be reached at (530) 542-8045 or by e-mail at email@example.com