Atlantic Club Sign

The Atlantic Club Casino and Hotel, Atlantic City

Sitting at a Monopoly penny slot machine in the Atlantic Club Casino Hotel, Karen Johnson pulled down on her hand, mimicking the movement of a locomotive chugging across the screen in front of her.

The 53-year-old Vineland resident moved in her seat to the music blaring from the unit as it ticked off free bonus spins. She stroked the side of the machine as she would a child, leaning in after a few seconds to say, “Great job.”

“I love this place,” Johnson said.

Relying on the business of Johnson and other patrons, the Atlantic Club has had four consecutive months of gambling revenue growth. In March, the casino was the sole Atlantic City property to record higher gambling wins than during the same month last year — increasing by 33 percent to nearly $13 million, according to the Division of Gaming Enforcement.

The increases come after a particularly poor showing for much of 2012, when the Atlantic Club finished last or near last in casino wins. The resort now places eighth among the 12 casinos, as of March.

The Atlantic Club’s use of promotional gambling credits also sets it apart from others. While every Atlantic City property reduced or kept relatively flat the number of promotional gambling credits — free play vouchers — it gave patrons in March, the Atlantic Club increased them by $1 million. In March, the casino issued about $3 million in promotional gambling credits, or 51 percent more year over year.

Those credits were fourth highest behind the nearly $5 million distributed by Borgata Hotel Casino & Spa and approximately $3 million each issued by Tropicana Casino and Resort and Trump Taj Mahal Casino Resort.

But while increasing the promotional gambling credits may have contributed to the bump in casino win for the Atlantic Club, that practice doesn’t always result in more profits for casinos, observers said.

“What this game is about is gross operating profit,” said Joe Weinert, senior vice president of Linwood-based Spectrum Gaming Group. “The trick is to use promotional gaming credits prudently.”

The practice of giving patrons promotional gambling credits is sometimes referred to as “buying the business,” because expenses associated with giving away free play eat into a casino’s profits. While free play may draw more visitors, the amount of money they spend gambling may net less revenue, because they are playing with the casino’s credits.

In Atlantic City, casinos must pay taxes on promotional gambling credits up to $7.5 million a month spread across 12 properties.

When casinos look for areas to save money, free play is one of the first and easiest areas to cut, said Richard Lehman, an instructor with the University of Nevada in Las Vegas.

“A lot of times, there is this knee-jerk thing on the free play,” he said. “It’s a tangible item they can cut.”

There are many factors to consider, particularly in the face of new slot machine technology, which allows for bonus rounds and may permit gamblers to play for longer on the casino’s money, Lehman said. At the same time, casinos risk alienating some of their best patrons and turning them to their competition if they dramatically curb their use of promotional gambling credits.

“It’s hard to recover, because guests’ expectations are higher,” Lehman said.

Michael Frawley, chief operating officer of the Atlantic Club, said he believes the casino’s use of promotional gambling credits is appropriate and would lead to an increase in net revenue.

“You are going to have to spend, but spend wisely,” he said.

Profit figures for the first quarter are expected to be released this week and will demonstrate whether the Atlantic Club has succeeded with its promotional gambling strategy.

“Every quarter, you get to see the results of that strategy,” Weinert said, adding competitors will be sure to take notice and react accordingly. “Atlantic City over the years, because the competition is so intensive and properties are physically close to each other, it’s been pretty much a copycat city.”

Issuing more promotional gambling credits has been part of the Atlantic Club’s broader effort to market the casino to South Jersey residents and value-oriented patrons.

“We’ve been very successful in our journey to building this brand,” Frawley said. “I still believe there are a lot of Atlantic City visitors that are looking for gaming and entertainment that are affordable.”

Johnson is a recent fan of the Atlantic Club, having converted her allegiance from a nearby casino about a year ago. She was drawn to the friendliness of the staff and, equally importantly, the promotional gambling credits worth $20 to $25 she receives nearly every time she visits. She goes three times a week and sometimes on the weekend.

“They give you more free play than any other casino,” she said of the Atlantic Club.

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