Wednesday, February 17, 2010

In sports today...

I apologize for not getting to part three of the AC express. I will have that wrapped up and posted by Friday.

In the meantime...

I would just like to point out a few things in the sports world...

1) The Ravens officially have two murderers on their team now. One on each side of the ball.

2) Tiger Woods is about to confess and apologize on Friday, live from the PGA corporate offices. *sigh... If I were him I'd shut the hell up and let the Grand slam and 14 wins he puts up this year do the apologizing.

3) ESPN had a lead in to the Eagles Kevin Kolb trade rumors. If this is the case expect Kolb to be traded to Cleveland by the end of the month. And scratch your head about what the Eagles plan to do for a Quaterback for the next 10 years.

4) Phil Helmuth wrote a blog post on his cardplayer blog about getting therapy about his issue with handling fame. Apparently there are two Phil's. Then just this week on High Stakes Poker, he blows up, whines about bad luck, and quits the game saying he would get Phil Ivey for TWO million at some point! Epic therapy Fail!

5) Bam wrote a post about the Olympics and the death of the Luge guy. I agree with his points and added a comment myself.

That is all...

Wednesday, February 10, 2010

OK, WHY Atlantic City will win... Part II

Consider yesterday's post a set up. I think I made arguments that AC should experience some issues with lost revenues from daily players, have proven that they already have (PA slots rev higher in Dec), and the overall horseshit that players have to get through just to get there.

Bam left a comment with a little sort of disagreement. HOP seems to think he's right in the sense that, of course, properties will offer bargains and incentives in order to keep your business from going elsewhere. Heff also wrote up a very astute point of view. One that comes from personal experience considering his own barriers from where he resides.

People tend to make judgments about business decisions, especially when it's not their business and usually over look many factors. From the outside, it is obvious to most that AC will face an uphill battle. Again, supply and demand dictates that when the supply exceeds the demand, those that do the best job will come out on top. And not only come out on top, but, by the very nature of business, destroy all those others who may try to keep a little taste of the market.

What we have here however is an anomaly which resides in the very product that is being offered. Gambling. See what most people forget is the very fact that gambling breeds demand. With the Sands opening table games in Bethlehem, PA, some might think that those who lived in that area and always traveled to AC might forgo their little $100 trips down south and just play right smack in their hometowns. It makes sense, and will probably happen... to an extent. It's also safe to say that out of the 500,000 players who reside in the A-B-E area of PA (Allentown, Bethlehem, and Easton) maybe 20,000 of them actually ever made the jaunt to AC. The point I'm making is that these new properties don't care about AC and taking their players. What they do care about is creating a whole new base of players to cater to. Now, I am making this case with poker being the main focus. So let's see what AC has to do to be sure that they themselves will be able to keep, if not grow, their existing business.

Let me tell you, the conversations I have had with management types down in AC have not all been doom and gloom. Sure, it's easy to panic and say "GOOD CHRIST! what are we going to do?" They all have budgets to maintain. They all see daily play leveling off already. Something that has only happened in the last year. All other previous years were growth years. That leveling off was a sign that poker may have reached maximum density.

From an industry standpoint I will tell you that those execs in AC should be jumping up and down with glee. Am I crazy? Actually I'm quite the friggin' genius. Let's look at Vegas. Vegas is in a bad spot. It's in the middle of the desert, and for most that want to play, they gotta go and spend a few days. Vegas has done a fantastic job building mecca's for debauchery and the good ole American worker, the college kids, and single 30 somethings feel as if they have reached a milestone by getting there and telling their stories of survival as if the have experienced a right of passage. The Vegas marketing machine, writers, and even Hollywood have helped with that.

AC is smack dab in the middle of the most populated section of the country. Hundreds of millions of players are within a 2 hour ride to the place. AC doesn't need what Vegas has. They already provide daily access. Something Vegas does not.

With the advent of new poker rooms being open closer to where those players that may have frequented AC will be, it's easy to recognize that those players no longer have a need to travel to AC. The properties know that. But let's not forget that most of these properties that will be opening in PA, DE, and MD will be owned by those same properties in AC. Foxwoods might be looking at the same issue. Probably why they are opening one smack dab in the middle of center city Philadelphia.

But this eludes my point. I'm not talking about individual properties here being able to lessen the losses. Atlantic City itself is going to have to take ownership. They will have to show some type of commitment to the properties in terms of adding infrastructure, commerce, and development in order to sustain viability in attracting and retaining consumers.

I will reiterate again that these new properties offering table games will grow a consumer base more than any before. Those is the areas where those properties exist that have never played before will certainly take their shots now. Believe me when I tell you there are a contingent of consumers that refuse to travel any distance to play live poker. Not to mention those that don't take it seriously enough because the ride was the very obstacle to even try. With properties being so close, those barriers go away and you will see more and more players attracted to the live tables.

I'm not saying that those who go to AC will stay in AC and the properties in the new states will survive on new players alone. However, in my next post, I will take a step outside the box and look at the possibility of what new properties will do for the poker industry itself. How it will grow playership, and what each property will need to do in order to maximize their market share. Including a plan for AC which will hopefully show you how they will continue to thrive for years to come, without having to give away the farm.

Tuesday, February 9, 2010

How Atlantic City will win

The landscape for live poker in the North East/ Mid-Atlantic states is changing. Quickly. As I've written about in the past, PA recently gave the nod to table games in their slot casinos across the state. DE is on board, and now Maryland is on it's way as well.

My man HOP just wrote a post about his thoughts on poker in the east (which include some incredible maps) and how it will effect Atlantic City and even some thoughts on how AC should defend.

In the business arena, when faced with new competition, conventional wisdom tells us that adding incentives to keep your current customers from straying will give you the best chance to retain that market share and keep losses at a minimum. *This means panic.

HOP goes on to suggest that AC should lower room rates, offer better deals, keep the big name talent coming in... All very lucid, intelligent, well thought out points (Ty Judge... OVER RULED!) <-- Herman Munster was the only person that could have played that part IMO.

What we have here is something rather complicated for AC. This isn't the corner McDonald's fighting for business over Burger King across the street. But it will be.

When a company, or organization, or person even, seems to have had a monopoly on something for some time (geographically at least) and then all of sudden, a deluge of new competition is unleashed, common sense tells you a few things. First, you would recognize the 'ole supply and demand rule. Supply has exceeded demand, hence the monopoly will lose a lot of business to competing shops. In this case, most likely, proximity. Players all over PA, DE, and MD traveled to AC to get their live poker (BJ, craps, whatever else) groove on. Now they won't. It makes sense to think that AC will lose a lot of that daily play they were so used to, to something as simple as convenience.

Secondly, If you've been to AC, you would know it's not the nicest, the easiest, or the happiest place to be. To make the hour and thirty minute drive for me costs $30 in gas, $12 in tolls, an extra 30-45 minutes in traffic, and $5 - $15 to park.

In other words, to just go and play your simple 1/2 nl hold'em live action game, or ship about $300 to play $15 max bet Black jack, it will be conducive to stay in state and hit up one of the many casinos that will now offer those same games.

This is all true when it comes to the guy or gal who likes to set out once a month and play recreationally. The ones who the casinos like to cater to. The $500 a month club if you will.

Yes indeed, these players will hurt AC. The Atlantic City press published a story in January that PA actually PASSED Atlantic City for the first time in slot revenues for Dec. '09. Not a good sign. Atlantic City better friggin' panic. If for any other reason than this... Over the years they have spent (all casinos collectively) a shit ton of money building poker rooms. Something that was in the past a loss leader. Casinos don't make money on poker like they do the other table games. It does have it's advantages. First, it became a great marketing tool to bring players to their venues. The popularity of poker throughout the early to mid ott's was a boon to lure people by the masses into a casino room. The hope was that spouses and others would follow to go play the "other games" while pops dusted off at 3/6 limit. It worked. Secondly, it's guaranteed income. There's no whale that can plop down a $300k bet and hit for 35 to 1 on black 20 (if 20 is indeed black). Hwever, that guaranteed income never even came close to the profit margins it expected off of general table games, therefore, almost considered a loss, when you calculate how much space it took away from being able to offer more of the games that actually provide those lucrative profits.

AC did a great job providing poker and saw a lot of value out of it. The Borgata has made itself the premier place to play in the East Coast, and a regular tourney stop for pros alike. Something of a feat considering how difficult is to get to AC (fly to philly, find a car service to get you down there, stay, get back). Trust me, it's an issue with players.

All of the above points to AC having an issue with PA and surrounding states being able to compete. Add to that the intentions of those PA properties. Philly Parx (Bensalem, PA) issued a press release some 3 months ago stating that they would open a 100 table poker room. That would make them the largest poker room on the east coast (Borgata is currently, with 85 tables).

Now, I have since learned that it will most likely be 75, but time will tell. The point is, not only Parx, but the Sands in Bethlehem, Harrah's in Chester, and other properties are making it a point to show everyone, consumers, vendors, and competitors alike, that they will be making a huge push to gain as much market share as possible. All of this, plus previous points, doesn't bode very well for AC and it's properties.

I will tell you however... AC management are no dummies. Let me get back to the original comparison of Burger king versus McDonald's. What we have here are like products against different brands, and each hold their own. Now, let's throw in Wendy's. Wendy's was successful because they catered to a different consumer. Back in the hay day, they catered to yuppies.

Atlantic City is going to take this path. Over the last decade, AC has tried to become more of a Vegas type arena. This wasn't done by the city fathers. This was (and is) attempted by the properties themselves. When I say Vegas, I'm being a little unfair. This would lead you to believe that it's about competing against Vegas, and that's not the point I am trying to make. What I mean is that AC will become more of a destination resort rather than a daily destination.

The history of AC is very important to be able to understand how much of a paradox AC will have to overcome in order to be successful against new competition. In the next post, I will go through the history of AC, how it made it's money, and what steps it will take to overcome the transformation of east coast gambling.

I will end this post by telling you that AC will not lower prices. You will actually be paying more for rooms. You will continue to see the level of talent showing up for shows, and you will see higher limits on their minimum table requirements. No more $10 black jack baby. You may not even see 2/4 limit in the poker rooms. AC will see some drop off initially from those curiosity seekers looking at those new rooms. Their daily play will have issues as well. But overall, I believe AC will overcome this onslaught of competition and, eventually, come out ahead.