A world of naked casino gambling

Posters and sandwich boards for strip clubs are hard to miss in downtown St. John's. Posters and 

Atlantic City is a common theme of mine because of its dramatic reversal of fortunes and because its decline mirrors that of my hometown, Reno.  Five years ago Atlantic City was the second Las Vegas and the center of casino gambling on the East Coast.  30 million people a year visited Atlantic City and left nearly as much money in a handful of casinos as gamblers did in the entire state of Nevada.  There were other casinos in the region, including the two largest and most profitable ones in the world in Connecticut, but nothing seemed to slow Atlantic City down.  That is until Pennsylvania legalized slot machines in casinos in that state – nine casinos have opened so far with another two or three potential new ones.  The Pennsylvania casinos were not necessarily better than the Atlantic City casinos, although they were newer and each cost a couple of hundred million dollars, so they were not exactly “slot barns” – but they were closer to the customers and that in business is often the critical factor.

Today, in 2011 Atlantic City is on a long slide – a four-year decline in casino revenues.  Another sign of the decline is found in the price of a casino in today’s real estate market – you can buy a casino in Atlantic City for 10 cents on the dollar, that is 90 percent less than you would have had to pay 5 or 10 years ago.  Those two factors, less revenue and less value are causing the majority of casinos in the city to reposition themselves, to find a new identity and a new marketing strategy.

Atlantic City is not the only place that is happening – those two mega-casinos in Connecticut are also on that long slide down hill and for the same reason – too much competition.  Foxwoods, once the largest and most profitable casino in the world,  is going to focus its efforts on the existing database and not “waste any effort or money on non-existent markets” which means they are going to concentrate on people who already come to the casino.  It also means they will put the majority of their efforts into the best of the know customers, weighting all of their promotions to those people – which often works as signal to the lesser players that it is time to move on.  That existing database is a well that will go dry if you do not bring new customers into the mix to replace the ones that burn out, die or move away and those who simply don’t play enough.

Mohegan Sun has taken the opposite tact, it has hired an expensive, big name advertising and public relations firm from New York City to make its case. The case? “We are the best, glitzy, fancy, one of a kind casino resort and worth the extra time it takes to get here.”  They are taking that message into New York City and around the region.  Just like the other strategy, that is not likely to be a long-term strategy for profit – all casinos need people who gamble – particularly they need people who play slot machines.  And when those New Yorkers who decided to go to Connecticut while watching an ad at a Yankees baseball game get to the casino, they will have to play a lot more than a normal customer to make up for the cost of attracting them to the casino.  New customers, new gamblers are essential to building a business, but it is good customers that pay the bills – and no business can afford to pay a high premium for customers who might or might not spend money.

The casinos in Atlantic City are also trying something new to make a profit – mostly they are focusing on the properties’ theme and existing attractions.  With nothing new and lost of competition, price is a common tactic in business competition.  In Atlantic City pricing is becoming an important component of the city’s casinos strategy – rooms, food and entertainment are getting cheaper.  But something even more fundamental is happening – an intense focus is on using sex to sell the property;  just like beer or car commercial, a pretty girl with lots of exposed skin helps make the sale. Resorts is leading the charge with new cocktail waitress costumes, a sexy party pit with very skimpily clad blackjack dealers and a naked circus.  How naked is the circus going to be: “As naked as the law allows” according to Dennis Gomes.   At least one of the casinos in Pennsylvania is responding with its own new costumes designed to titillate and keep gamblers from straying into the sex-pits of Atlantic City.  If the legislators and regulators do not step in Atlantic City may reinvent itself as the casino stripping capital of the world.


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