Gaming: Too big to fail?; Sports betting gets creative

Casino CEOs have no shame. They are capitalizing on the Coronavirus crisis to go to Congress, palms extended, cadging for a bailout. In an outrage-inducing story in today’s Washington Post, it is reported that the gaming industry’s wish list includes:

• • Direct cash payments (a Wynn Resorts brainstorm)
  • Tax deferments (already floated by the American Gaming Association)
  • Special bankruptcy protections
  • Zero-interest or low-interest loans

Although Donald Trump crony Steve Wynn is no longer in a position to benefit, he’s said to have Trump’s ear. A more direct beneficiary would be Treasure Island owner and Trump business partner Phil Ruffin. But that’s small potatoes compared to the enormity of the shakedown being attempted. The AGA tried to position it as a philanthropic move: “Our immediate priorities are actions that provide liquidity to allow us to support employees.” Wanna bet? Give casino bosses free money and where is it likeliest to go? Stock buybacks (especially with gaming stocks having been battered by Covid-19). That’s certainly what we’ve come to expect of stone-hearted boards of directors like MGM Resorts International‘s.

Also, the industry’s actions speak louder than its crocodile tears do. Caesars Entertainment has begun gleefully sacking entire departments. “I’ve been with the company for [many] years, and like a light switch, I’m out,” said one Planet Hollywood employee. While Caesars held out the vague possibility of rehiring, don’t expect that to happen once Tom “Chainsaw” Reeg takes over. Less secretively, MGM has been cutting a swath through its food-and-beverage operation. Nevada Gov. Steve Sisolak (D) did his best impression of a doormat, saying, “I strongly support any decision our properties make.” The Culinary Union stated it was trying to negotiate with employers to provide Coronavirus-related worker protections and to place the newly unemployed with commensurate jobs.

But that’s a slim reed of hope. As the ex-Planet Ho worker told the Las Vegas Review-Journal, “With everyone shutting down completely … there are no other jobs. I’ll ask for work, I’ll try to do something. If they start building hospitals, I’ll do that. I’ll do whatever it takes to put food on the table.” Contrast the me-first attitude of entitled American casino execs with the ethic of Genting Hong Kong, where top executives will be going without pay. Managers are taking pay cuts from 20% to 50%. We don’t see Jim Murren lining up to volunteer for austerity pay.

Indeed, casino bosses are putting themselves first when—if they really wanted to help their employees—they’d put their shoulders to the Families First Coronavirus Response Act, currently bottled up in the U.S. Senate, even though Secretary of the Treasury Steve Mnuchin has given it his blessing. The latter is said to be trying to induce Majority Leader Mitch McConnell with what the Boston Globe described as “an $850 billion in additional stimulus to prop up the economy, including $50 billion for airlines and Trump’s pet request, the suspension of Social Security taxes taken out of paychecks through the end of the year.” As for casinos, maybe, they should be considered for tertiary financial-relief bills, such as that being pondered for the airline industry (but only with strong caveats on how the money can be spent).

Frankly, we don’t believe the poor-mouthing we’re hearing from Big Gaming. After all, one of its leading companies–MGM—recorded a $2 billion profit in 2018, mostly from tax cuts. And what did CEO Murren turn around and do? He disemboweled the workforce with his infamous “MGM 2020” initiative, all to save $200 million-$300 million. Job cuts have an ominous way of becoming permanent and who’s to say a post-coronavirus MGM won’t resemble its current, emaciated state?

Financial relief won’t reopen the casinos any sooner. But it will soften the bottom line for companies during a tough time—and provide money to snap up depressed stock. Not that companies like MGM and Caesars aren’t wallowing in dough after multi-billion-dollar asset sales to REITs. Heaven forbid, MGM might even have to tap its Osaka reserve. If there’s any consolation, it’s that the WaPo reports, “But extending financial aid to casinos may provoke more political opposition than efforts to support airlines or other travel industries, particularly as federal lawmakers face scrutiny over whether they are picking winners and losers in an economy broadly affected by the pandemic.”

Also, the White House may have inadvertently given the cold shoulder to the casinos yesterday with a two-page memo that boiled down roughly to two words, “Stay home.” Among its particulars were “Avoid discretionary travel” and “Avoid social gatherings in groups of more than 10 people.” (Sound like anyplace we know?) And if you are at the casino, “Disinfect frequently used items and surfaces as much as possible.” Wipe down those slot buttons!

There’s a great deal of pain going around right now but not in the executive suites of Big Gaming. High priests of the free market, they should just suck it up and deal with it with the same intestinal fortitude being shown by the average American.

* You know who’s sucking it up? The sports-betting industry, that’s who. Instead of complaining, they’re finding new ways to generate action. Said South Point sports book Director Chris Andrews, “today we’re booking Brazilian UFC. Actually, a lot of people were betting it, so it’s kind of funny in some ways, but sad in others that this is all we have to bet on, but people are betting it.’’ Hey, be thankful that there are sports bettors so inveterate that they’d wager on jumping frogs, given half the chance. What other sports are benefiting? Australian rugby, Australian-rules football and Mexican soccer. As Andrews notes, “in our racket, people like to have action, so they’re getting some there.’’ William Hill is also huddling with regulators, trying to come up with new forms of action.

Over at the Westgate Las Vegas, sports book legend Jay Kornegay recalls a previous crisis, saying, “we went through something similar after 9/11 as the sports world paused in this country. I know it wasn’t long-term like this could be, but the rippling effect for 9/11 lasted for months because back then, no one wanted to fly after that, even after the sports world started up again.’’ In the meantime, the Kornegays of the world will undoubtedly find a means for getting by.