Atlantic City casinos are cutting down on the comps

The slots player used to be the cash cow for the 11 casinos in the city. But now that kind of player is held in less regard, and for two reasons: Atlantic City is losing slots players, at least the frugal ones, to the Pennsylvania slots-only casinos, and the generally lousy economy is hurting the Shore resort.

The casinos are comping less, and when they do, it is happening for the high-roller slots players and far-more-profitable table-game gamblers. The Atlantic City casinos spent USD 375 million in the three months ending June 30 for premium hotel rooms and other freebies. In the same period a year earlier, the casinos spent USD 422.2 million on comps.

„No longer does everybody get a comp no matter what,“ said Andrew Zarnett, a gambling analyst with Deutsche Bank AG in New York. „They [casino operators] have to be very discerning to give those comps to people who earn them. They’ve come to realize that defending your market by giving out comps to customers that don’t contribute to your bottom line is bad business,“ he said.

For Atlantic City, defending the market had meant not losing low-end slots players to the casinos in Pennsylvania. Now, the casinos here are surrendering those players, and Pennsylvania is paying to get them.

Promotional spending at Philadelphia Park, Harrah’s Chester Casino, Mohegan Sun and Presque Isle – the only four Pennsylvania slots parlors opened from April-June 2007 to April-June 2008 – spiked 130.7 percent, from USD 10.5 million to USD 24.3 million year-over-year.

The promotional credits were for free slots play only, said Doug Harbach, a spokesman for the Pennsylvania Gaming Control Board, which regulates the state’s gambling industry. He said there was no way to account for free buffets, free drinks and other freebies at the Pennsylvania casinos because they are not required to report those.

Mount Airy Casino Resort in the Poconos, Pennsylvania’s first, free-standing casino that has a hotel, has begun offering free rooms to Atlantic City loyalists, like Sue Moini of Woodbridge, New Jersey.

Collectively, the seven operating slots parlors in Pennsylvania, which do not offer dealer-staffed table games like Atlantic City casinos, took in USD 151.2 million last month, exceeding original expectations, according to the state gaming board.

Darlene Monzo, vice president of marketing for Philadelphia Park, which led the state in gross slots revenue at USD 31.3 million last month, said, „the amount of promotional allowances have increased significantly year over year“ at the casino.

The casino operators in Atlantic City say the days of comping wildly are gone for good. Slots revenue, which accounts for over 70 percent of their revenue, is down 8 percent for the first seven months of this year.

„You are seeing a shift in the entire marketplace on how we market,“ said R. Scott Barber, senior vice president and general manager of Harrah’s Resort, the only property among the 11 casinos to report an increase in gross operating profit of 18.7 percent last quarter over the same period a year ago.

„The female slots player from 45 to 65 years of age has always been the sweet spot for Atlantic City,“ he said. „It’s been our core bread-and-butter business and has always been vital to our revenue stream. „But we cannot be so reliant on them now,“ he said. „We have to develop poker customers and not be so reliant on one source of revenue.“

Mark Juliano, CEO of Trump Entertainment Resorts Inc., describes the lower comp spending in Atlantic City as „not aggressively irrational.“ He said the three Trump casinos here finally implemented a system to better track that is staying in the Trump hotel rooms and the customers’ level of slots or table games play.

„In prior years, we never had the mechanism that we now do,“ he said. „You can be more discerning because you have the information and are able to determine who you need to spend time and promotional dollars on.“

As a result, Juliano said the Trump casinos have gone from a 90-10 ratio of comped-to-paid rooms two years ago, to 65-70 comped and 30 percent paid rooms. Juliano said a customer’s level of play has everything to do with the perks available to him or her: premium rooms, the best shows or better restaurants. „It’s no different from any other company that yields their product to their best customers,“ he said.