Poker draws major attention

When Harrah's Entertainment anted up $50 million last month to rescue the Horseshoe Casino from bankruptcy, the casino operator was after a pair: the Horseshoe brand name in Nevada but also the World Series of Poker (WSOP).

Less than two weeks after the purchase, Harrah's announced that the renowned WSOP tournament would continue this year, including the broadcast rights to cable television network ESPN, and even enhanced, with more than $20 million in official prize money.

The reason for Harrah's quick action is that poker has become one of the hottest commodities on television, even drawing attention from network giants. When NBC recently aired the Travel Channel World Poker Tour's (WPT) Battle of Champions opposite the Super Bowl pre-game show, the poker tournament drew the second highest ratings in the time slot behind the quintessential football event itself.
In fact, the WPT has become the major driver behind the resurgence in poker, an even more astounding feat considering that the phenomenon was virtually non-existent one year ago. While the exposure and promotional possibilities were the real bait for Harrah's purchase of WSOP rights, the WPT has proven that poker tournaments could become lucrative themselves, with the company expected to show profits this year.

Although poker has been pushed to the side in most casinos over the years because of its lower margins to make room for higher-yield video and slot machines, the burgeoning interest in the game via television could have implications for the casino floor. That will turn on whether the current poker sensation moves from pop fad to market trend.
"One year ago today, no one had seen the WPT and ESPN hadn't really done poker in three years," says Steve Lipscomb, creator, producer and CEO of the WPT. "When we aired in March, 2003 on the Travel Channel, ESPN quickly picked up the WSOP. Everyone has seen what we've done with it and jumped on board. We've started something crazy."

Launched on the Travel Channel last March and airing regularly on Wednesday nights, the WPT has consistently been the cable network's number one rated series. While televised poker games weren't new at the time, the WPT revolutionized the production values by using 13 different camera angles, allowing viewers to see the hold, and highlighting the drama of the competition, using commentators and concentrating on the players instead of the play alone.

"You know it's a success when someone hits their forehead and says. 'I can't believe this has not been done before and that I didn't do it,'" says Lipscomb. "I hear that slapping across America. WPT has established itself as the dominant player in poker. Quite frankly, we've established poker as a sport ... We've established the sport and the franchise."

That success generated the interest from NBC. Faced with the insurmountable task of competing against the Super Bowl, NBC vice president of sports programming John Miller decided to test the poker phenomenon by airing the WPT's Battle of Champions filmed at the Bellagio against the football spectacle.

Pitted against the Super Bowl pre-game show, the WPT scored an impressive 3.0 rating. With each rating point equal to slightly more than one million television households, the WPT attracted an estimated 10 million viewers.

"It didn't have to do huge numbers to be a big success," says Lipscomb. "Most networks give up and don't compete against the Super Bowl. It was a low risk and the potential upside was huge. None of us can watch six hours of pre-game show. I think NBC did pretty well selling the advertising and it was late in the game (December) when it was announced."

If the WPT claims that it established poker as a sport, that doesn't mean it invented the idea. ESPN began airing poker the WSOP in 1993, adding other tournaments, such as the U.S Poker Championships and the World Poker Open, along the way.

In June last year, ESPN Original Entertainment finalized a five-year agreement with the Horseshoe Casino for broadcast rights to the WSOP. The ESPN subsidiary decided to spruce up its poker content and used the WPT model.

"Poker has always done pretty well for us," says ESPN publicist Keri Potts. "Last year was the first year that our guys, with their fingers on the pulse, decided to take it in-house and make a story of it. We decided to focus on the entire event and not just the [championship]. It's taking off and still climbing. The WSOP, it's the Super Bowl of poker. We realize that and see expanded coverage."

With the new emphasis, ESPN began airing the WSOP last July as a series. The improved structure was reflected in the ratings. While previous poker tournaments had scored minimally, receiving a 1.0 rating or better only twice in 10 years, the new production, aired on Tuesday nights, averaged a 1.2 overall rating and peaked at a 1.94 rating. According to Potts, the repeats have been doing almost as well.

Although ESPN made its contract with former Horseshoe owner Becky Binion Behnen, Harrah's will honor the deal. The 2004 WSOP will start on April 22 and culminate with a $10,000 buy-in, no-limit, hold 'em championship at the downtown casino on May 22. ESPN will film the entire event to run as a seven-part series consisting of about 20 one-hour episodes.

That kind of exposure, which would cost millions of dollars if purchased, is exactly what Harrah's had in mind when it went after the WSOP. "It generates enormous publicity and brings people from all over the world," says Harrah's spokesman Gary Thompson. "We always want to introduce our brand to as many people or venues as we can. It is an opportunity to get a lot of publicity."

Anticipating about 3,000 people at this year's WSOP, Thompson adds, "When you look at it in the context of hundreds of thousands of viewers by showing it on TV, it gets other people interested and gets them to come to Las Vegas."

That interest could push the WSOP out of the Horseshoe. Started in 1970 by legendary operator Benny Binion, the growth of the WSOP has been restricted by the limited size of the Horseshoe's poker room. Thompson noted that some slots and video games could be moved to provide extra space this year, but Harrah's might look for a new different venue next year.

The irony is that Harrah's properties here, the Rio and Harrah's Las Vegas, do not currently have poker rooms, making the Rio's convention center the most likely contender.

"TV will tell us what they need," says Thompson. TV won't, however, dictate but merely provide the opportunities Harrah's will get from the WSOP. With the high visibility of the WSOP, Harrah's can cross-promote the poker tournament at its other operations to produce a perpetual motion machine.

"We have 28 properties, so we might want to run events," says Thompson. "I can see promotions to get a seat at the WSOP at those properties."

While Harrah's is looking to generate interest in its properties, the WPT is showing that poker itself can generate revenues. Last month, the company entered into an agreement with New York-based Brandgenuity LLC to license products ranging from T-shirts and card decks to video games and poker self-help kits with the WPT brand.

The WPT has already been approached by numerous manufacturers and vendors seeking to apply the company brand to their product. With clients including Snapple, Sports Illustrated, TV's This Old House and Meow Mix, Brandgenuity will be the agent sorting out the lucrative potential for an undisclosed percentage.

"I saw a guy next to me on a plane with Harley-Davidson tattoos all over him," says Lipscomb. "[Brandgenuity] are the geniuses behind that ... The revenues from licensing are impossible to predict in dollars. We are just beginning to go through this and how to take it to market ... But it could be a huge revenue stream."

Lipscomb has a 20 percent stake in the WPT, with the other 80 percent owned by Lakes Entertainment, a Minnesota-based casino management company with agreements with four Native-American tribes. The licensing deal, along with expanded TV coverage, is expected to take WPT from the "red to the black" by the middle of this season.

Does the potential for profit and the promotional value make it a takeover target? "We have created a tremendous amount of value," says Lipscomb. "And my phone number is ..."

That value has not passed unnoticed. Competitors are rushing to fill the proven demand for televised poker, but Lipscomb says the market should limit the growth to protect the integrity of the sport, as occurred with baseball, football and basketball, before it turns into wrestling.

"They're rushing to the marketplace that we've already established," he says. "Our model is similar to the NFL or NBA. I'm not sure how much space there is."

Which leaves the first and the biggest, namely the WSOP and the WPT. By not going head to head, neither Harrah's nor the WPT consider each other competition while both sides say the other complements their efforts and could seal the sport from becoming degraded. Lipscomb and Harrah's executives have met to discuss their poker operations, although neither would reveal the contents of their meeting.

"I don't know if they're rivals," says Thompson. "[Harrah's president and CEO] Gary Loveman had discussions with the WPT that I wouldn't characterize [as competitive]. A lot of people love poker. The WPT is extremely successful and drawing enormous attention to poker and the WSOP is one of a kind. We work in conjunction with each to promote the sport."

"Two big players is good for both of us," adds Lipscomb. "It makes it difficult for others to come in ... I can only imagine, they being Harrah's and having the WSOP, that they're pretty happy how we've revolutionized [televised poker]."

The heat is being fueled by the media attention on the poker sensation. Potts noted that media inquiries about televised poker have actually surpassed those for the NFL and the NBA recently.

"The other thing is the other [sports] have been around a lot longer," she says. "But we've had more calls in the last 2-3 months about our poker show than when they were originally aired." Targeting males between 18 and 49, poker has become a hot topic, "kind of water cooler talk," according to Potts.

Thompson believes poker's popularity has rebounded because anyone can play. "You can't play with Tiger Woods and have a chance to win," he says.

The poker boom could have big implications for Las Vegas. Brian Gordon, principal at research firm, Applied Analysis, believes the immediate impact of poker's recent rise is to attract new visitors who have seen and enjoyed televised poker, not poker players, to the city.

"Serious poker players are already in Las Vegas," he says. "Overall, these types of advertising and publicity events just drive the market as a destination."

Although the appeal of poker is up, the earnings potential of the actual game for casino operators are limited. In fiscal year 2002, poker and pan tables in 52 casinos statewide produced $60 million, a mere 0.7 percent of total gaming revenues.

"It will have to continue awhile on TV," says Gordon. "The TV [poker] concept goes along with the 'reality' TV concept. But there is not a big push to open poker rooms." But Thompson thinks that may change. "With the reemergence of poker, that might be changing," he says.

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