A Really Subjective View of Atlantic City Casinos

There are two basic ways to make money in a casino: the “Circus Circus” small bettor/grind out every dollar approach and catering to the high rollers as the Aladdin (now Planet Hollywood and owned by Harrah’s) tried to do with the London Club, which had the first million-dollar chip in the gaming industry. If you are going to cater to high rollers, casino management has to be willing to live with more variance in the casino’s “win” month to month. William Bennett, former CEO of Circus Circus, took an ax to the baccarat tables after they lost too much to some high roller.

Atlantic City started as a day-tripper place because only 300 rooms were required to qualify for a casino-hotel license. For about a year, Resorts International had a lock on the casino market in Atlantic City because they were the first to open. When Atlantic City casinos first opened, and you took one of the buses that went to the casinos, you got back more than your bus fare in quarters and a free buffet coupon. In the summer of 1977, a friend of mine who looked 21 did nothing but ride the bus back and forth to Atlantic City all day to collect the extra money because he couldn’t find a summer job. By the time that I went there last in 2008, the refund had dropped to about half of your bus fare on weekdays, a third of it on weekends, and maybe $5 off the buffet. If you took the Greyhound bus out of Baltimore, Silver Spring or Washington, DC, as I have, Trump Plaza was the first casino drop-off and the last place to be picked up, which allowed people to maximize the time that they spent gambling. I learned that it is better to be picked up at the first pickup place so that I could choose my seat. The order of stops in Atlantic City was the main bus station, casino #1, and casino #2, with this order reversed on departure.

The Frontier Casino in Las Vegas had their workers strike for six and a half years, ending in 1998. This doesn’t make the failure to settle the strike at the Taj Mahal right, but it is not unprecedented. There have been books written about Donald Trump and the building and management of the Taj Mahal. For instance, three of Trump’s top managers for the Taj Mahal were killed in a helicopter crash in 1989. The dominant color in the Taj Mahal’s decoration is red, which is geared to attract the Chinese and Koreans because they think that red is lucky. I can say that the rooms in Trump Plaza were nice, but I never stayed at the Taj Mahal.

Casinos are a high fixed-cost business, and Trump overpaid for all of his properties, if you compare construction costs per square foot for comparable properties, adjusting for when they were built. He wanted the prettiest buildings, and didn’t understand gamblers, many of whom would trade lower table minimums and lower hold percentages for a pretty building. Trump Plaza sold for $20 million in 2013, and it cost $210 million to build in 1984. Trump Marina sold for $38 Million in 2011. If you look at the sales on a “per hotel room” basis. they are comparable prices.

A trend that crept into the gaming industry sometime in the 1990s was that every department had to make money. This gets to ridiculous degrees, such as allowing a pit boss to give away only ten packs of cigarettes per shift to players at one casino in Cripple Creek, CO. The longer trend of flat to declining wages affected the gaming industry, but even so, we spent more on gambling than any other leisure pursuit. Looking at the player club formulas for complimentary goods is instructive. In 2008, one had to gamble $5 on the slots to get one cent of credit toward complimentary items at Harrah’s properties. There were also efforts to increase the house edge on table games, such as paying 6:5 for a blackjack rather than 3:2. Resorts International had a deal in 2010 or so where you were paid 90% of your bet if you won on blackjack. To bet only $5, you had to put up an extra fifty cents. if you won, you’d be paid $5, but they would take the fifty cents.

Trump would have done well to do what Steve Wynn did: build a casino and sell it for a profit some years later, but this would have cost him the opportunity to continue to extract money from the company. Wynn opened the Golden Nugget casino in 1980 in Atlantic City, but sold it to Bally’s in 1987. The former Golden Nugget had three other owners/managers before it closed permanently in 2014. It is easy to ask what could have been. Had the money that was supposed to go to Atlantic City redevelopment actually been spent on redevelopment over the first 30 years or so of casino gambling in Atlantic City, it would be a far different place. Unlike Las Vegas and most other towns where casino gambling is legal, casino workers didn’t move into town(or a nearby town) to a large degree, and there was still satellite parking for them about two miles outside of town as of 2008.

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