Vol. 5 No. 1, January 2008
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New Year, New Outlook
It’s the beginning of a new year and we’re all a little concerned about the near-term future of the Atlantic City gaming industry. A few days into the new year, we’ll hear about the first-ever decline in casino revenues year-over-year for Atlantic City. This will put an end to what is probably the most incredible winning streak ever seen in the gaming industry.
For 30 years, gross gaming revenue has topped the previous year (and once again, gross gaming revenue is the money won at the table games and the slot machines before any expenses are subtracted—rent, salaries, insurance, capital expenditures and many more items). But because of a variety of reasons—the smoking ban, competition from surrounding states, a downturn in the economy, among others—that wasn’t in the cards in 2007.
In our Q&A this month, we speak with Jay Snowden, the vice president and general manager of Showboat. He made a comment that I think is very true, when I asked him about this revenue decrease. He said, “It’s probably the best thing ever to happen to Atlantic City.”
I agree with him wholeheartedly. As Jay explained, Atlantic City has been doing the same things over and over again for the past 30 years. While the Borgata, Caesars, Showboat, the Tropicana and other casinos have begun doing things differently, there has been too much reliance on the tried-and-true. Giveaway programs like comps, cashback, instant jackpots and bonusing will probably never go away, but Atlantic City needs to get smarter in marketing.
Although Pennsylvania has slot parlors (and soon enough, full-blown casinos with table games), although New York has slots at racetracks (and soon, huge Indian casinos within driving distance of Manhattan), although Delaware will soon have a form of sports betting (shame once again on New Jersey politicians who refused to let the public have its say on that issue), Atlantic City has much more.
Let’s start with a critical mass of gaming that may never be duplicated again in the United States. With 11 casinos now, within five years the city should be home to at least 13 full-scale casino resorts. Players like the option of moving from one casino to another without having to get into the car. If you feel unlucky in one joint, just go next door.
And then let’s talk about the amenities that Pennsylvania, New York or Delaware will never have: shopping from high-end retailers and outlets to gourmet restaurants, superstar entertainment, suites that attract the highest of high rollers, a world-class arena, a Boardwalk that shows signs of revival, and much more. And let’s not forget, we’ve got a beach and the ocean. No other casino resorts in the Northeast can boast this combination.
Now let’s talk about what we need to compete with the more convenient slot parlors in the region. First and foremost is a larger marketing budget to tell potential customers what Atlantic City is all about. This should come through the ACCVA and be partially funded by the state, which receives hundreds of millions of dollars in taxes each year from the casinos—not to mention increased visitation because of the casinos.
We need a better way to get people to Atlantic City. When they get here, we need a better way to get them around town.
We need to clean up Pacific Avenue and spread the excitement across the city.
We need a government that works for the good of Atlantic City, not just the good of the public officials and their special interests. And we need a commitment from all parties that demonstrates the importance of Atlantic City to the South Jersey region and the economy of the entire state.
In short, we need to do things differently to reverse the trend we saw in 2007. We need a positive attitude that conveys the confidence we all feel about the future of Atlantic City.
So let’s not dwell on the past. It’s a new year and we at Casino Connection hope it’s a happy, healthy and prosperous one for all the residents of our region.
