Hard Times? Put Lipstick on that Hog!

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OK, it’s official: the bad economy is endangering the American dream. It’s not enough that Christmas shopping in 2008 was as dismal as Sunday afternoon at a nursing home, that people have lost their 401Ks, their jobs are either gone or going and they are either unable or afraid to buy a new car. Now we hear that casino gambling, lotteries, sex and pornography are all suffering from lack of customers. Even Larry Flynt is reportedly asking for a multi-billion-dollar bailout. Link to Story

Surely Flynt’s asking for funds from the government is an elaborate hoax. Or, has the sex business been caught with its pants down? Maybe so! I’ll bet call girls are really having a time right now covering their expenses. Surely, with all the other economic woes, there are fewer Johns out there looking for a good time.
The gambling industry is hurting the most, though. All the state lotteries have reported fewer sales in recent months, with Powerball down 17 percent and the Mega Millions down 8 percent Link to Story. And you can bet that Las Vegas is suffering during this economic “downturn,” with its reported 4 percent drop in revenues. Not since 9/11 has gambling been so unprofitable.  link to story
Gambling is supposed to be immune to recessions, but the current situation is so dire, so widespread and has set off such a violent chain reaction among us that nothing is doing well. I also have a hypothesis about this – gambling has become such an integral part of our culture in the United States that the gambling industry can’t help but reflect what is going on in the broader economy, because it IS the broader economy. As a result of the drop in revenues, casinos have scrambled to stop the red ink from flowing and have cut perks and comps remarkably in a desperate bid to increase profits.
I think this was a huge mistake, a tragically wrong marketing ploy, that may endanger the industry as a whole if it is not stopped immediately.
Harrah’s casinos used to offer great stuff – free rooms, lots of free food, etc., just to entice people to come up or down and gamble. When Harrah’s was sold in 2006, the company began to change its comps. By mid-2008, you still got rooms, but the tiers for comps went up substantially, and the food was the first thing to go. Locally, the Indian casinos in Oklahoma have also changed the way they do business, and not for the better. For example, at Grand Lake Casino near Grove, a gambler could have had a free steak dinner with all the trimmings — and it didn’t take that long to earn the steak. By October that comp disappeared completely. And they used to give comps in cash on the playing card, as much as $60 or more for people who spent a lot, but that disappeared in November. Now in January, the comps are coming back, but not at pre-December levels. Even the points on the card that accumulate as you play add up slower. It’s hard to justify playing for four hours at 90 cents a pull, when you look at the free cash on the card and see $5. That is ridiculous.
Casinos need to turn their bad profits around, and to do this all they have to do is pay attention to something economists have known for centuries: when the economy suffers, people buy lipstick. Economists say that typically in bad economies people tend to cocoon and stay home more. People also tend to buy small, comforting items rather than bigger, more expensive items. This is why they call it the “lipstick effect.” Link to Story
So, if the casinos (and the call girls, for that matter) want to change things, they have to use this “lipstick effect” to their advantage. They need to go back to being a comforting refuge from reality and stop channeling Ebenezer Scrooge. Every drop in perks, every steak dinner lost is a reminder to the patrons that the economy is bad. They might as well go ahead and put a big clock on every wall, because they are bringing the rest of the world’s woes in the door. The penurious atmosphere causes gamblers to suspect that maybe, just maybe,  the casinos aren’t there to help them make it through the week and pay their bills. It also causes us to look at the slot machine we are playing with narrowed eyes, and wonder: “Is this thing ever going to pay off?” Despair in a casino is not a good thing.  So casinos – heed my words, and continue the perks, including the steak dinners, the free slot play, and make those one-armed bandits pay off more often! Bring on the drinks! Gamblers need lots of drinks! After all, people are just going to put it all back. What are they worried about? Harrahs, are you listening? Hey, you guys on the reservation! Word up!

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