Atlantic City: What are promotional allowances?
February 2nd, 2010 at 9:04:57 AM
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I was looking at the sheets posted for Atlantic City casinos and I added up the non-gaming revenue for all 11 resorts and it came to $1.34 billion. But the promotional allowances were $1.36 billion.
Now I know that the casinos don't give away every bite of food and drink, the spa treatments and every single hotel room. I assume that they subsidize some transportation. I went once about 25 years ago, and I remember the bus as being basically free. I don't know how often they fly helicopters. But it still seems like a lot of money to spend on transportation. What do you think they spend the promotional allowance money on?
Now I know that the casinos don't give away every bite of food and drink, the spa treatments and every single hotel room. I assume that they subsidize some transportation. I went once about 25 years ago, and I remember the bus as being basically free. I don't know how often they fly helicopters. But it still seems like a lot of money to spend on transportation. What do you think they spend the promotional allowance money on?
February 2nd, 2010 at 9:07:50 AM
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Just a guess, but maybe promotional allowance means how much they are allowed to spend, not how much they actually do spend?
"Dice, verily, are armed with goads and driving-hooks, deceiving and tormenting, causing grievous woe." -Rig Veda 10.34.4
February 2nd, 2010 at 9:40:28 AM
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Buses are a seperate entity.
For example, I took the casino bus this past weekend. It cost me $33. Every cent of that went to the bus company. When I got to AC, the Trop gave me a $25 match play. The $33 was mine, but that $25 is part of that $1.36bil of promotional money.
On the other hand, if the casino drops the dime to send a limo and/or helicopter, that is also part of that promo money.
But another part is the invisible money.
When the casino comps a room or meal, or even gives a discount, the bean counters make a journal entry to shift the money, and that's part of that total too.
For example, I took the casino bus this past weekend. It cost me $33. Every cent of that went to the bus company. When I got to AC, the Trop gave me a $25 match play. The $33 was mine, but that $25 is part of that $1.36bil of promotional money.
On the other hand, if the casino drops the dime to send a limo and/or helicopter, that is also part of that promo money.
But another part is the invisible money.
When the casino comps a room or meal, or even gives a discount, the bean counters make a journal entry to shift the money, and that's part of that total too.
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February 2nd, 2010 at 10:16:58 AM
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Quote: pacomartinI was looking at the sheets posted for Atlantic City casinos and I added up the non-gaming revenue for all 11 resorts and it came to $1.34 billion. But the promotional allowances were $1.36 billion.
Now I know that the casinos don't give away every bite of food and drink, the spa treatments and every single hotel room. I assume that they subsidize some transportation. I went once about 25 years ago, and I remember the bus as being basically free. I don't know how often they fly helicopters. But it still seems like a lot of money to spend on transportation. What do you think they spend the promotional allowance money on?
New Jersey publishes the breakdown of Promotional Allowances. Promotional allowances include gaming comps (cash and player's card). Here is the summary for 2008:
| Promotional Allowance | $2008 (thousands) |
|---|---|
| Rooms | 316,079 |
| Food | 246,078 |
| Beverage | 137,348 |
| Bus Program Cash | 103,150 |
| Promotional Gaming | 106,492 |
| Complimentary Cash | 389,256 |
| Entertainment | 28,382 |
| Retail/non Cash | 28,039 |
| Other | 7,238 |
| Total | 1,362,062 |
-Total Room revenue for 2008 was $497,810,000 so 63.5% of room revenue was comped.
-Total Food and Beverage revenue for 2008 was $635,614,000 so 60.3% of room revenue was comped.
-With total comps of 495,748,000 represents 11% of the total casino revenue for 2008 (4.5 billion).
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February 2nd, 2010 at 11:34:54 AM
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Nevada publishes the breakdown of Promotional Allowances. Here is the summary for FY2008 where the percent is of that department alone.
I was curious how different it was from NJ. NJ seems to comp much more of their rooms, and more food, (probably about same on beverages). There is a big difference in casino comps. The G&A of $218 million probably includes all the collateral expenses of flying in whales (etc.).
There are 117,300 rooms listed in casinos in Nevada (and probably 70K+ rooms outside of casinos).
In AC there are 17,300 rooms in the casinos.
I was curious how different it was from NJ. NJ seems to comp much more of their rooms, and more food, (probably about same on beverages). There is a big difference in casino comps. The G&A of $218 million probably includes all the collateral expenses of flying in whales (etc.).
There are 117,300 rooms listed in casinos in Nevada (and probably 70K+ rooms outside of casinos).
In AC there are 17,300 rooms in the casinos.
| Promotional Allowance | FY2008 % | FY2008 $millions |
|---|---|---|
| Casino Department | 18.1% | $2,183 |
| Rooms | 17.0% | $869 |
| Food | 20.2% | $713 |
| Beverage | 46.5% | $620 |
| Other Income | 5.0% | $150 |
| General and Administrative | 0.9% | $218 |
| Total | 19.0% | $4,753 |
