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Atlantic City: Bad Slot Payouts, But the Boardwalk and Atlantic Ocean Views are Wonderful

15 February 2000

From the moment Atlantic City opened its first casino in 1978, the city has endured an endless and inevitable string of comparisons to Las Vegas. And Atlantic City almost always comes out second-best.

That's understandable, given that Vegas is the world capital of gambling and is a true escape from anyplace else in the world, while Atlantic City is still largely seen as a grimy city that happens to have casinos.

Yet, until last fall, when Steve Wynn and a few of his rivals spent nearly $4 billion to build even more neck-craning gambling wonders in the desert, Atlantic City's 12 casinos actually did more gambling business than the entire Las Vegas Strip. They won about $4.1 billion, primarily from gamblers who either drove or rode on buses from the greater New York City and greater Philadelphia regions.

Clearly, often-maligned Atlantic City has something going for it -- and it's not just convenience. "When we talk to our customers in focus groups, we find their number one reason for coming here is that it's a trip to the shore," says one casino vice president.

Indeed, a stroll along the world-famous Boardwalk and its unblemished views of the Atlantic Ocean can be soothing and compelling. The Boardwalk also allows visitors to easily hop among 10 of the casinos. It's a nice little getaway for the 35 million annual visitors, most of whom are day-trippers.

Gambling, though, is still le raison d'etre -- not that it's as good as in Las Vegas. Blackjack is dealt from a shoe holding six or eight decks, compared to single- and double-deck options at some casinos elsewhere; the slot payouts are in the range of 91-92.5 percent (Harrah's and Tropicana offer the best payouts), compared to 95 percent at some places in Vegas; 25-cent 9/6 video poker machines are almost nonexistent; and table minimums usually start at $10.

The slot payouts are relatively low because casinos are prohibited by law from advertising gambling odds. The casinos are quite happy about that; otherwise, you'd have an odds war hurt profits (but delight gamblers).

What separates Atlantic City casinos from everywhere else are the cash giveaways. Competition is so fierce among the dozen tightly packed casinos that they frequently start marketing wars in which gamblers are the winner.

There are times when casinos will give you $30 in cash, a food coupon and a $5 credit toward your next visit just for stepping off the bus. (And that's no small cost to the casino, given that 9.5 million gamblers arrived at Atlantic City casinos via 374,000 buses last year!)

"Historically, Atlantic City represents a strong economic value for the customer," says Mike Pollock, who publishes Michael Pollock's Gaming Industry Observer, a brainy newsletter for casino executives and analysts.

"Those 35 million visitors are in reality 6 or 7 million visitors who are coming five or six times each. The repeat business is vital and you don't get that unless you give them something. About 14 percent of the top line (in gambling revenue) goes back to the customers in promotional dollars -- and that's not counting hotel rooms, food and beverage and other comps.

"Much of what you see here in terms of cash-back programs is unheard of in other markets," Pollock continues, "and becomes standard operating procedure in Atlantic City as a result."

Steve Bourie, who authors the annual American Casino Guide (www.americancasinoguide.com), is no fan of Atlantic City because of its less-advantageous gambling and high room rates. But even he concedes, "As a player I believe the inducements to come back were stronger from Atlantic City casinos than Las Vegas." Of course, he adds, with lower slot payouts they can afford to do that.

The key to rewards is joining the slot clubs. They're free and they'll reward you even for small play. You'll also learn about special tournaments and deals on rooms, food and entertainment.

(Joe Weinert has covered the casino industry for The Press of Atlantic City for four years.)

Next: Part Two: Hotel Rooms Tough to Get in Summer, a Bargain in Winter

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