Comps up as revenue down in Atlantic City casinos
June 11, 2007
ATLANTIC CITY, N.J. (AP) – Hal Thomas drives from Murfreesboro, N.C. to Atlantic City at least three times a year, knowing there are many gambling resorts much closer to his home.
The reason: Comps.
Those freebies that casinos dangle to entice gamblers to spend their time and money here range from free hotel rooms and show tickets to coupons for a free buffet or a roll of quarters to pump into slot machines.
But comps are getting a closer look this year in Atlantic City, where for the first time in the 29-year history of legalized gambling, casinos will likely take in less money than they did the year before.
Bad news for casinos has so far meant good news for gamblers. Revenues at the city’s 11 casinos declined by 5.5 percent in May, marking the fourth month out of five this year that the take was down from the previous year.
But comps, defined as promotional allowances and expenses to attract customers, were up 2.1 percent over the first quarter of 2007.
Recommended Stories For You
Four casinos have cut back on their comps as a way to make up for declining revenue. But seven others are handing them out faster, hoping to hold on to customers who now have other, closer places they can gamble.
In particular, slots parlors that opened up within the past six months in Pennsylvania have eaten into Atlantic City’s core customer base, which still consists of slots players who often arrive in buses and consider a free buffet coupon a dealmaker, if not a birthright.
“We thought about going to Philly, but we came here because of the comps,” said Thomas. “My mailman must think all I do is gamble because I get so much (junk) in my mailbox from casinos.”
In recent years, he and his wife Kay have rarely paid for a meal in Atlantic City, usually stay for free, and have seen at least one show for free.
The couple said it appears to them the Atlantic City casinos have been offering more freebies this year, though they weren’t sure why until now. They said Harrah’s Atlantic City seemed to be the most generous, while the Atlantic City Hilton Casino Resort was being more generous than usual with cash-back offers.
Actually, the Hilton posted the second-greatest decline in revenue in May, down 11.8 percent, and had cut back on its comps over the first three months of this year.
The Tropicana Casino and Resort, which reported a 12 percent decline, also cut back on its comps during the first quarter.
The three casinos bearing Donald Trump’s name, which are being bid on by at least two interested parties, all posted revenue declines in May. Trump Marina Hotel Casino was down 8.7 percent compared with a last May; the Trump Taj Mahal Casino Resort was down 7.5 percent, and Trump Plaza Hotel Casino was down 4.5 percent.
Resorts Atlantic City posted the biggest increase in monthly revenue, up 8.3 percent, putting it slightly ahead of perennial earnings powerhouse Borgata Hotel Casino & Spa, which was up 8 percent.
Overall, Atlantic City’s 11 casinos took in $408.8 million in May, down 5.5 percent from May 2006. Slot revenue was down 7 percent at $294 million, and table game revenue was down 1.4 percent at $114.8 million.
Michael Pollock, managing director of Spectrum Gaming Group, a casino industry consulting firm, said he expects comps to increase slightly this year as a result of the revenue decline.
“Over time, the Atlantic City properties are going to invest in their facilities and leverage the advantages they have over the competitors markets,” he said.
That includes being able to offer free rooms, food and show tickets – something a racetrack casino can’t do.
“Comps count,” said William Crocker of Rocky Mount, N.C., who was alternating among several Boardwalk casinos Monday. “We can go to Vegas. But we get rooms, show tickets and buffets here without a six-hour plane ride.”
Michael Osanloo, senior vice president of marketing for Harrah’s Entertainment Inc., which owns four casinos here, sees that sentiment repeated over and over in customer studies.
“We want to make sure we take care of our customers and continue to be aggressive in comping the best customers into this market,” he said. “We have competitors that are being extremely aggressive with comping.”