Economic Woes Might Pinch Casino Comps

ATLANTIC CITY — While there may have been no such thing as a free lunch in the rest of the world, you could get one pretty easily here for three decades, along with a roll of quarters, as long as you rode the bus to a casino.

But now that the economic slowdown has hit casinos as well, the city's 11 gambling halls are split on how desirable it is to continue to hand out free meals, hotel rooms or show tickets to gamblers.

That's because for the first time, Atlantic City casino revenues declined last year, and out-of-state slots parlors continue to steal the resort's most reliable customers. Some casinos feel that the slowdown justifies cutting back on giveaways to help the bottom line; others feel that a slow period is when freebies are needed most.

Since the first casino opened here 30 years ago, tour buses depositing herds of senior citizens out for the afternoon at the gambling house doorstep has been a big part of Atlantic City casino culture. It's now one the industry is trying to move away from — gently — so as not to antagonize loyal patrons as it seeks more affluent bettors.

The amount of comps handed out in Atlantic City declined last year by 2.4%. Six casinos actually spent more on giveaways last year, while five spent less. Two of those, Trump Plaza Hotel and Casino, and the Tropicana Casino and Resort, were significantly down.

Charles Lafferty, a retiree from Prospect Park, Pa., says he can feel it.

"You can definitely tell it's slowing down," he said as he spoke with friends in the lobby of the Atlantic City Hilton Casino Resort. "One woman we come down with used to get hundreds of dollars at a time. Now she says it's a lot less."

It's important to keep people like Lafferty happy: He lives eight minutes from a racetrack slots parlor in Pennsylvania but comes to Atlantic City because they make him feel like a big deal.

"They give you free drinks here, and we get to stay overnight for free sometimes," he said. "We like that."

But handing out free meals, drinks, hotel rooms, show tickets and cash is expensive. The city's 11 casinos collectively spent $1.63 billion on it last year. In an environment when casinos are being forced to tighten their belts to deal with an economic slowdown and intense competition from out-of-state gambling halls, comps can be the first place companies look to cut.

But Nick Danna, a senior equity analyst at Sterne Agee & Leach, said turning off the freebie spigot will be hard to do.

"It's a difficult culture to break," he said. "The expectation is still there; the customers are used to it.

"There are certain customers that Atlantic City really shouldn't attract anymore because they're just not profitable," he said. "Then there are other customers they'd like to comp less, but it's very difficult because they (the customers) are used to it."

Danna said the real opportunity for Atlantic City is in customers who currently look down on the resort, still viewing it as the domain of elderly people who clamber off buses with buffet coupons in hand. These folks tend to favor Las Vegas.

So to attract them, Atlantic City casinos are spending billions on non-gambling attractions like gourmet restaurants, spas and shopping outlets. A frenzy of hotel construction is nearing completion, which will add thousands of new rooms.

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