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Some things in casinos are free, but how many is not clear
Sunday, December 03, 2006

Any gambler who's been on a casino floor in Las Vegas or Atlantic City knows an offer of free alcohol will come his way and, perhaps, he counts on it.

And if that player is a big-time customer in the eyes of the casino, the "comp" system of free meals, lodging, entertainment and other gifts kicks in.

Such industry standards will be part of the slots business in Pennsylvania, but it's still uncertain as to how much.

Gov. Ed Rendell signed legislation last week that permits the 14 potential casino licensees to give away drinks, but it's an option, not a mandate. And the casinos have the choice of providing complementary items and services to customers they feel deserve it, but Pennsylvania's relatively high tax rate on gambling revenue might minimize such offers compared with other gambling meccas.

"Don't fall into the trap of comparing this market to Las Vegas or Atlantic City," said Bob Oltmanns, spokesman for PITG Gaming LLC, which is applying for a license to operate on the North Shore. "Pittsburgh is not going to be that, with people coming from all over the country. ... It's not at all unreasonable to expect there will be comp services for our more frequent players here, but what that's going to be, I don't know."

PITG is part of Majestic Star Casinos, which operates in Las Vegas, Indiana, Colorado and Mississippi. Mr. Oltmanns said the general managers at each of the company's locations typically determine what complementary services are appropriate, based on local competition, regulations and other factors.

At the Mohegan Sun at Pocono Downs, near Wilkes-Barre, the first casino to open in the state, all players are offered free nonalcoholic beverages. The racino did not jump immediately to provide beer, wine and cocktails without charge. "It's a multimillion-dollar cost to take on," so it is under review, spokesman Jim Wise said of the free alcohol.

Mohegan Sun customers can obtain free alcoholic drinks based on comp points they build up from their volume of play. Every $200 they put into a machine earns them $1 in potential discounts on drinks, meals and gifts. At Mohegan Sun's larger facility, a tribal casino in Connecticut operating with a tax rate less than half of Pennsylvania's, players earn $1 in comp value for every $90 wagered.

"In any business, a company's ability to rebate is based upon its cost structure," Mr. Wise said, so customers can't assume they will get the same benefits in Pennsylvania they would elsewhere.

The Meadows Racetrack & Casino, which plans to open with at least 1,700 slot machines in May, does not intend to make alcoholic drinks an automatic entitlement for players, said Bill Paulos, principal with the racino's parent firm, Cannery Casino Resorts. That policy is different from the company's practices at its two Las Vegas area casinos, where drinks are freely given away.

"In [Nevada], that's been standard business procedure for 50 years," Mr. Paulos said. "We certainly don't believe people are specifically coming to a casino because they have free drinks. ... Pocono Downs' business has been terrific, and they haven't been giving out free drinks."

He said The Meadows' pay-for-alcohol policy will be based in part on consideration for restaurants and taverns, which can't offer free drinks. He added, however, that in creating its list of player comps based on their volume of play and amount wagered, the racino might make cocktails a basic perk they could choose. The Meadows might also become more generous with alcohol to all players if competition from other casinos dictates it, Mr. Paulos said.

The four racinos in West Virginia can set their own policies on free drinks. The two closest to The Meadows, Mountaineer Racetrack and Gaming Resort in Chester and Wheeling Island Racetrack & Gaming Center, give away soft drinks and coffee but charge patrons for alcohol.

Mountaineer spokeswoman Tamara Cronin said the policy was "based upon the fact that the majority of our patrons arrive by personal vehicle."

As do most casinos, the West Virginia operators encourage slots customers to use a player reward card, inserted into the machine during play. For the casino, it builds player loyalty and enables monitoring of preferences and habits among different types of games. Harrah's Entertainment, one of the other potential operators of a Pittsburgh casino, has information on 40 million customers who registered for cards at its various locations.

People using the cards typically rack up points based on "coin in," the industry term for the combination of frequency of play and the amount wagered. The more play equals the more points, triggering an ascending level of available perks, such as merchandise, meals, entertainment and lodging.

Representatives of casinos yet to open said it was premature to describe just what customers would be entitled to, based on their amount wagered. There will be obvious differences from what big-spending Nevada visitors are accustomed to, however, in that Pennsylvania locations typically will lack Vegas-style hotels, concert arenas and other resort amenities.

They will, however, have restaurants, gift shops and smaller entertainment venues. They also have the possibility of arranging with hotels to offer free or discounted rooms for those favored players staying overnight, which will be the minority.

"The key for all of this to work [with comps] is for developers to still be able to make a profit," Mr. Paulos said, noting the difference between Nevada's casino tax rate of less than 10 percent and Pennsylvania's, above 50 percent.

Dennis Rudd, a professor of hospitality and tourism at Robert Morris University, said the player cards and comps were so commonplace in most gambling jurisdictions that "there's no reason not to get one." They are based on how much a patron risks in wagers, not how much he loses, so the card-carrying gambler maximizes his potential value.

"You take your comp money and go to the gift shop and buy a shirt or watch or whatever you can with the amount of money you have," Dr. Rudd said. "Even if it's small amounts you play, it adds up."

The Pennsylvania Gaming Control Board generally will leave it up to the casinos to offer what perks they deem fit, but the operators must keep records of the comps. The board is to be notified of any person who is comped for more than $10,000 in value in a five-day period, which, presumably, would be rare.

First published on December 3, 2006 at 12:00 am
Gary Rotstein can be reached at grotstein@post-gazette.com or 412-263-1255.
Read the PG's Casino Journal by Bill Toland
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