On Tuesday, December 19, 2006, Harrah’s Entertainment officially announced that it had been bought out by two private equity firms, Apollo Management Group and Texas Pacific Group, for $26.7 billion, which included more than $10 billion in debt. The deal was the climax of a long negotiation process between the entities. Included in these discussions was the World Series of Poker, to which Harrah’s owns the full rights. Gary Thompson, Director of Communications for the WSOP, sat down with PocketFives.com to discuss the buyout as well as the recent online gambling legislation.

“Harrah’s received an offer on October 2nd for $81.50 per share and the two private equity firms have been in discussions with our Board of Directors since then,” said Thompson. “The Board considered an offer from Penn National as well, but, in the end, the best deal for the shareholders was the $90 per share offer which was finally agreed on.” According to an Associated Press article, the $90 per share figure represents a 36% premium over the Harrah’s share price when the parties began negotiations. “I think that Texas Pacific and Apollo were interested in Harrah’s because of its very strong cash flow, great brands, great properties, and great management team. They bought Harrah’s because the senior management team is arguably the best in the business. They saw it as an opportunity to keep the management team in place and allow them to keep running the business.”

Harrah’s, which is publicly traded on the New York Stock Exchange under the symbol “HET” will now be governed privately: “One of the benefits of a company going private it is able to invest in growth opportunities that, over the short term, might have a negative impact on quarterly earnings. As an example, if Harrah’s would like to build a whole new casino in Las Vegas on its current property, it could tear down an existing casino as a private firm because they’re in it for the long term.”

With regards to the future of the WSOP, Thompson claims, “We don’t anticipate any impact whatsoever. The deal won’t even close for another 12-14 months, so Harrah’s will still be a public company through next year’s WSOP. Even after the deal closes, one of the top five brands that Harrah’s owns is the WSOP. We are working diligently right now to make the tournament bigger and better and to expand it globally.” As in 2005 and 2006, Harrah’s will not accepting third party registrations from online poker sites (.com’s) that do business with U.S. residents. “PokerStars.com and PartyPoker.com could not register players directly last year because they did business with American customers. Ladbrokes could because it wasn’t doing business with U.S. residents.”

In the midst of this multi-billion purchase is the fate of the WSOP in regards to the Unlawful Internet Gambling Enforcement Act, which was signed into law on October 13, 2006, long after the final card of the 2006 WSOP had been dealt. The record-breaking field of nearly 9,000 hopefuls entered the Rio, and Jamie Gold walked away with a WSOP bracelet and $12 million. “We have tried to figure out the landscape of WSOP in 2007. We have a players advisory committee consisting of several poker professionals who are close to that side of the industry. They’ve come back to us with estimates ranging from 2,000 players in the Main Event to 12,000 players. These are players who are more familiar with it than we are and even they can’t come to a consensus. We just don’t know what the impact on the Main Event will be.

When Harrah’s first heard that the UIGEA had been passed in a last-minute political maneuver, “we were very disappointed. We had been under the impression that there would be support for a study of online gambling. The current legislation does nothing to protect consumers nor allows companies to compete on a global scale. It also encourages operators to develop that do not have the best interests of the consumer in mind.” What would Harrah’s support, then? “We think regulation makes a lot of sense. Online sites would be paying taxes; money would stay in the U.S. instead of flowing overseas. The reality is poker is a quintessential American game. To me personally, it’s like banning football because a couple of players get hurt each year. If Congress tried to ban baseball or football, I would hate to be sitting in Washington when the public’s reaction to banning football came out.”

PocketFives.com would like to thank Gary Thompson and the Media Relations staff at the World Series of Poker for assisting with the arrangement of this interview.