The DNA of Atlantic City

Marketing in the Atlantic City casino industry has always been super-competitive. That hasn’t changed today but gaming veteran Richard Schuetz (l.) explains some of the history behind today’s cutthroat competition.

The DNA of Atlantic City

“Those who do not learn history are doomed to repeat it.” —George Santayana

In the early 1980s, the Golden Nugget Corporation, an entity chaired by Mr. Stephen Wynn, hired me. I joined the organization somewhat fresh out of a five and one-half year ordeal working on a Ph.D. in economics at the University of Utah. The person who hired me was Clyde Turner, the executive vice president and chief financial officer, and he was interested in my education (especially in analytics) and the fact that I had worked on a casino floor for a number of years while pursuing my education. It might be interesting to also note that when I interviewed for the job I only owned one suit, and it did not fit.

The only business cards I ever received from the company listed my position as Clyde’s Boy, and that was very accurate for I was at Clyde’s beck and call twenty-four hours a day. Some evenings Clyde might want to know the volatility of a high-end roulette wheel, the next day he may want an analysis of a bond covenant, and that evening he might want an analysis of the world’s economy, and the Golden Nugget’s role in it. You know, stuff that was important to Clyde.

I was also provided with note pads that read: From the Box of Richard Schuetz. This was about the fact that I was traveling around the organization quite a bit, doing this and that, so I just kept all of my office stuff in a box rather than a desk, ready to head out to the next assignment.

While my house and office were in Las Vegas, all of my work was in Atlantic City, for all of the company’s eggs were in that basket. And since this was even before the fax machine, I spent a great deal of time flying back and forth between Vegas and AC, and I had these two huge black document carriers that many people began to believe were attached to my body. Also, I kept pretty much to myself, for much of the work was aimed at either pinpointing inefficiencies within the organization or working to identify bad decisions, and when one is engaged in such activities, it is best to keep their mouth shut as to what they are doing.

On a personal level it was difficult to plan things while working for the Golden Nugget. I would get a very early call in the morning and be told to get my plane tickets from Cindy for a flight leaving later that morning, and to get to the airport. I would then stuff much of the materials from my box into a suitcase and head to Philadelphia (if I was flying commercial), be met by a limo there, and make my way to the property down the expressway. At some point after checking into my room, Mr. Turner would call and tell me why I was there. As something of an aside, one of the interesting benefits of working for the Golden Nugget was the Forced Savings Program Mr. Turner developed, I believe in conjunction with Mr. Wynn. It was a program designed to ensure that a person was working so much that they never had time to spend a cent.

On one of the trips I made to AC, I received word after I arrived in my hotel room that I needed to do an analysis of the bus program, and in the Atlantic City market at this time, the bus market was of critical importance. The property had great data for such a project and I set out to map bus traffic to different performance variables in an attempt to isolate and identify any relationships. I began running all types of regression tests searching for the analytic Rosetta Stone for the bus program. It was great fun, relevant, and critically important to the success of the property.

I have always been a strong believer in what I call getting down and dirty with the data. What I mean by this is that I always try to make an effort to get behind the data, for often times surprises can be lurking there. One late evening, while working in my hotel room in Atlantic City on the bus project, I received a call from Mr. Turner and he wanted my results NOW. It was my guess that Mr. Wynn was running about the office area waving some financial statement in an advanced stage of agitation as only Mr. Wynn could do. I told Mr. Turner that I had not finished yet (a totally unacceptable answer) and he inquired as to what I had been doing. I responded that for the last two days I had been riding the busses between Philadelphia and Atlantic City as if I were a customer, looking at the folks on the bus, listening to their conversations, and asking them questions. Mr. Turner asked what I had learned from this effort, and I told him a number of different things, including that apparently some folks thought they needed beach bags, ice chests, and umbrellas to visit the casino, remembering, of course, that Atlantic City is a beach community. I seem to recall that Mr. Turner yelled an obscenity when given this information. Anyway, riding on the busses while doing a series of regression equations on the bus program is an example of what I call getting down and dirty with the data.

Now, to the point—the reason my analysis of the bus program was so important was because we, for all practical purposes, owned something like 130 busses. Moreover, when someone got off of that bus we gave them a ridiculous amount of hard coin, food coupons, and the like, and as soon as we gave someone on one of our busses a ridiculous about of coin, a competitor down the boardwalk would give a person on their bus program a ridiculous amount of coin plus a silly amount of coin, and so it went. The name of the game was Bus Wars and the apparent goal was to ensure that the margins were eroded from every operator in Atlantic City. Apparently Bus Wars was so much fun that it went on year after year after year, long after Mr. Wynn pulled up stakes having lost confidence in the market and not wanting anything to do with its future..

Another detail I noted about Atlantic City was that not a lot of money was being spent to enhance the look of the city. When people left the Golden Nugget, our valets parking attendants would say: “Thanks for visiting the Nugget. Be sure to lock your door,” and that was for good reason. Atlantic City was a very economically depressed area, and it did not seem to be getting better too quickly. Part of the problem was that it was a troubled hood when gambling was legalized there, and part of the problem may have been the nasty habit of Atlantic City’s mayors to get indicted, and like the Bus Wars, this went on and on and on. Another problem seemed to be that the operators there, especially on the Boardwalk, seemed to have gotten in the habit of sending any money they made somewhere else.

Why bring up this past? Well, I always enjoy telling my stories. Moreover, lately I have noticed that many of the newer people involved in the business have no idea as to the history of the industry, and are potentially in position to repeat many of its mistakes. To these people I would suggest that they keep their eyes open for a new rendition of the Bus Wars in Atlantic City, except this time it will be fought over the internet with marketing bonuses and incentives. The players will not he handed hard coin, but rather digital incentives designed to keep the player from drifting over to one of the others sites, and the folks at the other sites will also be waiving incentives to convince those players they should come on over, and none of them will even need to bother to get on a bus – they can just stay home. And it will have the potential to go on and on and on until margins are crushed.

I would also suggest that the politicians that exercise control over Atlantic City will just not be able to make much difference, regardless of where they are located, and the neighborhood will not experience many positive changes. The political leadership of Atlantic City should measure their success by the standard of whether or not they get arrested or indicted, start fights in parking lots, or some other mischief. Anything beyond that is a stretch goal.

Lastly, I would expect many of the online operators will follow that great Atlantic City tradition of taking the money and not reinvesting it in Atlantic City, but in some other out-of-market project.

Anyway, these are the ramblings of a casino guy who thinks he has seen this show before.

Articles by Author: Richard Schuetz

Richard Schuetz started dealing blackjack for Bill Harrah 47 years ago, and has traveled the world as a casino executive, educator and regulator. He is sincerely appreciative of the help he received from his friends and colleagues throughout the gaming world in developing this article, understanding that any and all errors are his own.