ATLANTIC CITY - The casinos may be playing a dangerous game by discounting high-rollers' losses, but casino analysts say it's a game that has been played for decades with little overall harm.
This side of the gaming industry came to light toward the end of 2010 and the first few months of 2011, when high-roller Don Johnson began handing out beatings like Halloween candy to the resort's casinos. Between December 2010 and April 2011, the Bensalem, Pa., man pocketed about $15 million playing blackjack at Caesars Atlantic City, Borgata Hotel Casino & Spa, and Tropicana Casino and Resort, although he acknowledged some losses in between.
As Blackjack Insider eNewsletter discovered, however, Johnson was apparently aided by a since-discontinued discounting program that allowed him to get 20 percent of his losses returned to him, the article said.
The secret, Blackjack Insider found, was for a player to take advantage of the loss rebates with the fewest number of wagers as possible, which Johnson did by making gigantic bets. Doing so tilted the odds in Johnson's favor for five rounds of roulette and for a jaw-dropping 650 hands of blackjack, the newsletter's researchers wrote.
Even so, analysts say the resort's gaming halls aren't exactly going belly-up.
"In the big, global macro picture of Atlantic City, it may seem significant now," Harvey B. Perkins, executive vice president with Spectrum Gaming Group said of Johnson's rampage, "but in the long, statistical odds and in the long, continuing revenues of Atlantic City overall, it's not material to the market."
Similarly, Roger Gros, publisher of Global Gaming Business Magazine, said "casinos can actually benefit from their drubbing because it draws attention to their offerings, bringing in players who could go elsewhere.
"But you see the downside," added Gros. "They lost millions."
Gros, who worked as a dealer in the 1970s and early 1980s, said discounting losses was and remains a common tool used by casinos to attract high-rollers. The individual casinos, using applied mathematics, can decide well in advance how far they are willing to go.
He pointed to a second, as-yet-unrevealed individual from New York who won $5.3 million from the Tropicana mostly playing craps in early June, returning later in the month to win another $2.9 million.
Gros speculated he could have been the beneficiary of a half-dozen lucky rolls while playing a half-million dollars.
"That happens every day in the casino, but they never have that kind of money on the table," he said.
Casino executives would say little about the programs, other than that their high-rollers are very important to them. But they tightly clung to the specifics, including what effect this had on their overall business.
Don Marrandino, Caesars Entertainment's eastern division president, said that Caesars Atlantic City caters to high-end players by offering high limits and other amenities, adding, "Both in slots and tables games, we take great care of our high-end players and would never discuss them."
At Tropicana Casino and Resort, CEO Tony Rodio said through an assistant that the casino's "discounting strategy is used as a marketing tool and is confidential."
Tropicana allows its premium players to bet as much as $100,000 per hand at blackjack and close to $200,000 at the craps tables. Johnson has said that Carl Icahn, the casino's billionaire owner, had personally invited him back for more gambling, albeit under different terms.
Rebating losses is a pretty established practice across the industry, Joseph Lupo, senior vice president of operations for Borgata Hotel Casino & Spa, acknowledged, but said different houses have different standards. He would not discuss the Borgata's policies.
Lupo said it was unfair to discuss rebates, however, outside of the broader context of other discounts and incentives that casinos offer top players. "We have two jets," Lupo said. "That is a way in which we can bring customers in and that's a cost so that can be a form of a discount as well."
He said rules for different games also vary from casino to casino, and at the Borgata, from pit to pit. While he wouldn't say the rules were "negotiable," he said "I guess it's up to the house to determine how they would handle this."
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