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.


HighOnPoker said...

I agree that the expansion of poker in the NE will increase the player base. I also agree that some of the AC casino's parent companies won't be hurt too badly because they may have stakes in the new casinos. But neither of those facts negate the fact that those who travel to AC solely for the chance to gamble will no longer have to do so. What about that attrition? How does AC curb that? We agree they need to become a destination spot. So, is that it? And is it really that easy to get more money to add infrastructure and development? Those are the tough questions.

Sean D said...

Absolutely true...

I have a casino available to me in Ruidoso NM and in Hobbs (4 hours and 2 hours away and I've made only 2 trips to them rather than the multiple trips I've made to Vegas.

Why? Quality!

The beds are nicer, the overall vibe is better and the offers I get are great. I got offered a two night stay with 250$ in free play from Vegas just yesterday.

From NM... a $4 free play certificate.

What looks better?

I could go to Hobbs and play slots and Poker Tek machines or go to Vegas and experience everything that I've ever wanted.

I've never gone to AC because the one trip a couple of college kids and I started on turned around because of the complete DUMP that AC was.

It takes the city of Atlantic City to realize with more options, the best, nicer, cleaner, safer option wins.

See what the Borgata has done with their hotel? They have become the premier stop in AC because they know how to do it right. Style , class, hipness, safety and quality and ability to evolve. Which goes a long, long way.

If those characteristics weren't important, people in Vegas would still be staying in the El Rancho Las Vegas and the Desert Inn.

BamBam said...

I think the real point is something needs to change, or else AC will get left behind. They can't continue on the way that they're going.

You have to admit, (I can't believe I just typed that!) that AC for the most part, has lost some it's luster due to neglect. That's the only reason I ever hear from those that go, that WILL NOT be going back. And yes! You can count me in as one of those folks.

I really look forward to part III of this. It's a great subject!

1Queens Up1 said...

Bethlehem is unique in that, while they are trying to pull people to the region with the casino and they appear to be targeting not only the local area but the NYC crowd, they also offer many different events like Musikfest or Celtic Classic to get them to keep coming back.

For long as I have lived Bethlehem has been trying to become the tourist captial of East/Central PA and with the casino they might just do it.

snakster said...

I don't know where to begin, so this may seem disjointed; I apologize in advance.

AC as a destination sounds good in theory, but as others have alluded to, they have 30 years of history and perception to overcome. Also I would not necessarily hold up Las Vegas as a bullet-proof model for success. It was only this past week that the Ritz-Carlton announced it was closing its doors in May. Other RE issues in Vegas have been well documented.

Having a top flight band or comedian appear at you casino does not a destination make. Overcoming the perception that once you walk 100 feet from a casino, "AC is a dump" is a tall order.

Most people who read this don't really know who I am, but Riggs knows me quite well. I am practically the personification of the person he described in this post. In 5 years of 'playing poker' I can probably count on one hand the number of times I've been to AC to play.

However I am drooling at the prospect of driving maybe a half hour to Philly Parx to play some cards AND to watch live horse racing (in person, not on a TV screen...big difference). I fully expect that Harrah's in Chester will do WSOP type events; and that's a little over a half hour away. How about a day going to check out Eagles training camp, and then a short 5 minute drive to play cards at Bethlehem?

But that's me and Jim will probably say I'm proving his point about the casual player. However I work with some people who are more....frequent casino-goers. Big fans of craps and roulette. They are also chomping at the bit. They can't wait to be able to do their weekly thing without having to go all the way to AC.

Frankly I don't see how AC can establish themselves as a 'destination' and offer anything that PA places can't; other than the ocean of course. But then again, no one will ever confuse the AC beach for Paradise Island (now THAT'S a destination).

AC has top bands and comedians playing? So will Behtlehem; So will Philadelphia; so will Mount Airy. Shopping? Really? You're going to travel to AC so you can shop?

I also disagree with the notion that AC will become MORE expensive. That would be complete suicide. I can't say that they will slash room rates (though they should), but there has already been evidence that they are willing to offer LOWER stakes games rather than move to higher. Just last month I saw an article where one AC casino was bringing back $1 Black Jack tables.

People who cling to AC will do so because they will have convinced themselves that they are somehow getting more by going there. They will be the minority. Execs better be worried, there is good reason to be.

Tom McMenamin said...

Does anyone else get really frustrated when reading a paper and the entire article cannot be completed on one page, so the powers that be state something to the effect of "see AC win III on page 15" and when you go to page 15 it isn't there ? I do ! I'm guessing Riggs was talkin bout Good Friday.