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Monday, September 01, 2014         

NEW YORK TIMES


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In Atlantic City, doubling down on gambling

By KATE ZERNIKE

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ATLANTIC CITY, N.J. » Known simply as Revel, the newest addition to this gambling city was going to be different.

The emphasis was on luxury, with the Himalayan salt grotto in the spa, the botanic garden winding toward a rooftop pool, the Michelin chefs instead of all-you-can-eat buffets. There was no smoking in its 47 stories, and with floor-to-ceiling windows offering vistas onto the Atlantic Ocean, you could almost forget the seedier streets at its back. There was a casino, but it was self-contained on one floor, as if it were an aside. This was a resort, its promoters said, that happened to have gambling.

Little more than a year after opening, Revel is sorry. Deeply, dearly sorry.

And it is an expensive apology. As it fights its way back from bankruptcy, Revel announced that it would refund all slot losses and match all other casinos' promotions for the month of July. Revel cost $2.4 billion to open and has spent millions more in recent months to install diner-fare restaurants, more slot machines, and air filtration systems - because it now allows smoking, too. Buttons worn by employees and billboards along the Atlantic City Expressway declare its new slogan: "Gamblers Wanted." And its new official name: Revel Casino Hotel.

It is just another spin of the wheel here, where the casino industry that revived an ailing beach resort a generation ago is now itself in need of reviving. Revenues have fallen 40 percent since their peak in 2006, as new casinos in neighboring states have taken away gamblers. Revel, hailed by Gov. Chris Christie as a "turning point" for the city when it opened in April 2012, lost $111 million its first year. And last year, Pennsylvania displaced Atlantic City as the gambling capital of the East, according to the American Gaming Association.

Christie came into office with a five-year plan to turn Atlantic City around, establishing a new tourism district and a $30 million marketing campaign to promote the city as more than just a gambling destination. "Do AC," the ads encouraged, as casinos rushed to promote their nongambling attractions: concerts, shopping, a gay nightclub, the beach.

But now, the emphasis is on gambling again, as Revel attests. Christie, who offered Revel tax incentives to keep going when its financial backers threatened to halt construction, recently signed a bill allowing gamblers to place bets online to casinos here, and is in federal court fighting to bring sports betting.

The Do AC campaign is taking a pop-up mock casino on a road show, setting it up in Philadelphia, Baltimore and New York City to try to lure gamblers back to Atlantic City. Another casino, the Trump Taj Mahal, will bury vouchers worth $200,000 in the sand in September to try to lure the would-be lucky to dig them up - players will have to have their Trump players' club card for a chance to win.

Above the banks of slot machines on Revel's casino floor, signs promoting the new slots refunds declare "You Can't Lose!"

"We've made a lot of mistakes," said Jeffrey Hartmann, the interim chief executive brought in from Mohegan Sun in Connecticut to lift Revel's fortunes. (The company entered bankruptcy in March and emerged 57 days later.) "We're asking our customers for a second chance."

"To quote 'The Godfather,'" he added, "we wanted to make them an offer they couldn't refuse. If this doesn't get to them, nothing will."

Randall Fine, whose marketing company was brought in to help Revel, said that in 83 years of gambling, no casino had ever offered to refund slot money - and little wonder, given that the rule of thumb had been that casinos make 80 percent of their profits on slots.

He could not say how much the refund would cost. But, he said, "If it costs us something, it's because it worked."

That is because the refunds are not automatic: players have to sign up for a Revel card - a sort of rewards program - to get the money back. They have to lose at least $100 on slots. And the refunds will be put on the card, parceled out in weekly increments for a 20-week period beginning in August.

On the floor last week, this caused some grousing that "they're not cutting us a check," as one man said. Still, people had begun lining up on the newly expanded casino floor at 8:30 Monday morning - the first day of the promotion - to get their Revel cards.

By late afternoon, the casino floor was buzzing compared with a normal Monday. "I couldn't believe it, we came down the escalator and there's people," said Linda Walling, a retiree who comes to Atlantic City weekly with her husband Richard, from their home in central New Jersey.

"It's a gorgeous, gorgeous resort," she said. "It doesn't feel like you're in Atlantic City, it's more like Vegas." But for all its sleek loveliness, she said, "We'd be walking past the restaurants, there'd be 100 employees and nobody in there. You walked down the escalator looking at the machines in the casino and it was empty."

Looking around a new lounge catering to high-rolling slots players, she declared the new moves to be "going in the right direction."

Pattie and Jack Paterson had come from Delaware County in Pennsylvania after friends told them about the slots promotion. "We're not big gamblers, because we don't have money to gamble," Paterson, a welder, said. "But we'd been wanting to go to Atlantic City on a rainy day. We came in because of the promotion."

They were looking for a poker slot machine, and settled on Jacks or Better and Double Joker. "We'll be back in August," Paterson said.

Angela Roslatov, in Atlantic City with several branches of her extended family, was a target customer for the promotion. She had come to Revel once to see a show, but never returned, preferring Caesars or Harrah's. Revel, she said, "had an attitude."

Immaculate Zarbo, a relative, agreed, adding that the no-smoking policy was unwelcoming. "I can't play five or six hours and not have a smoke," she said.

She appreciated the new smoking area - Atlantic City casinos are allowed smoking in 25 percent of their properties, but most split it onto different floors, forcing people who move around to extinguish. Revel said its smoking area is the largest contiguous area in the city.

Still, they were complaining that they had been waiting an hour and a half to find someone to take their drink order. "We pressed the service button three times," Roslatov said.

Revel, now owned by several hedge funds, has told state regulators that it anticipates cutting its operating loss by more than half, to less than $43 million this year. The fortunes are not just the casino's, but New Jersey's. The state relies on casino gambling for $300 million in tax revenue, and is counting on online gambling at casinos to provide an additional $180 million.

Christie bet particularly big on Revel, after its biggest backer, Morgan Stanley, pulled out before construction was completed. The project was started with the help of $261 million in tax incentives.

If Atlantic City fails to turn around, there will be pressure from the northern part of the state, where legislators are eager to expand gambling. But Revel said it was not done luring customers.

"This is not the last thing we're doing," Fine, the casino marketer, said. "We're showing gamblers we want them."

On the casino floor, Roslatov's family had finally found a waitress. She and a cousin asked for the cocktail menu. Zarbo ordered a coffee, "so I can keep going."





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