Casinos seeking
new customers

Sep 21, 2004 8:23 AM

Recent reports indicate that casino revenue in Nevada is beginning to flatten. And while no one is sounding the alarm, experts say good marketing, now more than ever, is essential to the industry.

"Marketing has control over supply and demand,’’ says an advertising insider. "You have to explain what you deliver and you have to deliver what you explain."

While no one will argue that marketing is essential to generating a customer base, some in the casino industry are wondering whether casinos are advertising to the right market segments.

For instance, casinos spend very little to promote table games and sports betting, according to Ted Gottlieb, president of Gaming International Inc. and a former dealer and gaming instructor. His company’s Win Cards teach the basics of blackjack, craps and roulette.

"Less is being done today to promote these games than was being done 20 years ago," Gottlieb said.

Gottlieb said organizations such as the state’s Commission on Tourism and the Convention and Visitors Authority in both Reno and Las Vegas aren’t doing enough to promote gaming.

"The Nevada Commission on Tourism will spend about $2.4 million on advertising this year, which is among the lowest budgets in the 11 western states," Gottlieb said. "Most of that money will be used to tout events, attractions and other non-gaming destinations."

Gottlieb agreed that marketing efforts are often designed to lure people to the casinos, but from that point there’s little to entice players to gamble.

Sports betting is another segment of the casino that gets short shrift from marketers. Even though Nevada is the only state in which sports betting is legal, the state does virtually nothing to promote its sports industry.

"I’m not naïve enough to believe that I don’t know where the money comes from," said Bob Smith, director of operations for Leroy’s sports books at a recent Casino Management Association seminar. "We aren’t the biggest money maker, but we are important to the entire casino package."

Tourism officials said promoting tourism beyond the casino was in the cards nearly two decades ago.

"Twenty years ago, legal casinos were beginning to spread across the United States, and Nevada made a historic decision to promote its other attractions in addition to gaming," said Bruce Bommarito, executive director of the Commission on Tourism. "The rise of tribal-owned casinos further motivated Nevada’s diversification of tourism, which has resulted in today’s assortment of adventure, outdoor recreation, family entertainment, shopping and fine dining, as well as scenic wonders, festivals and events.

"Rather than shrinking in the face of competition, Nevada has transformed itself into a wish-list destination that offers a unique and unbeatable package," he said.

Most of that transformation took place in the 1990s, starting with the building of The Mirage in 1989.

"What other city built 60,000 hotel rooms largely along one street in just 10 years?" asked Hal Rothman, a UNLV historian and author of the modern history of the city, "Neon Metropolis: How Las Vegas Started the Twenty-First Century.

Along the way, the money that used to flow from gamblers started to flow from tourists. When The Mirage and Excalibur opened in 1989, gambling accounted for 59 percent of casino revenue on the Strip. This year, it’s projected to be just over 40 percent.

A stark indicator of how Las Vegas has come to rely less on gambling revenue are the revenue figures for the industry’s largest company, Caesars Entertainment. Gambling accounts for 90 percent of the revenue at Caesars operations in Atlantic City, but only 49 percent at its Western casinos, which are primarily in Las Vegas.

"While tourists are good for the economy, they are not as good as gamblers," Rothman said. "When they do gamble, they bet less and they don’t play as long."

But the notion that casinos are missing the gaming boat is an unfair one, according to casino operators.

"Not every tourist is a hard-core gambler who will spend all his time and money in the casino," said one casino insider. "The operators knew that in order to grow, there had to be a greater appeal to tourism and the convention business and less reliance on Las Vegas as a gambling business."