Fauci on sports; Churchill Downs “on track”

Bad news, sports bettors. Given the absence of widespread testing for Coronavirus, Dr. Anthony Fauci is backpedaling on his projections that professional sports could resume this year. (As Fauci has said elsewhere, a model is just a model; when you get new data it changes.) “If you can’t guarantee safety, then unfortunately you’re going to have to bite the bullet and say, ‘We may have to go without this sport for this season,’” Fauci told the Boston Globe. National leaders are in various states of aggressiveness on this issue, ranging from New York Gov. Andrew Cuomo (yes), California Gov. Gavin Newsom (maybe) to Los Angeles Mayor Eric Garcetti (no). “If we let our desire to prematurely get back to normal, we can only get ourselves right back in the same hole we were in a few weeks ago,” Fauci told the Globe, adding that major leagues would have to be prepared to respond were there a new spike in Covid-19 cases.

Fauci’s nostrums for resumption of sports include:

• “[W]e have the capability of identifying, isolating, and contact tracing.”
• Improved hygiene, social distancing and facial coverings.
• Quarantine and regularly test players, particularly in contact sports.
• Have at least a 14-day runway before resuming play (given the incubation period of the virus).
• “You don’t want the economy to completely crumble. But sports are important also for the well-being and the mental health of the country.”
• Lotteries for attendance at sports events with an artificially limited number of fans.
• No banner ceremony for Fauci’s Washington Nationals without fans in the stands? “That’s a good choice.”

“I would love to be able to have all sports back,” Fauci concluded. “But as a health official and a physician and a scientist, I have to say, right now, when you look at the country, we’re not ready for that yet … the virus decides how quickly you’re going to get back to normal. You can try and influence the virus by your mitigation programs, but at the end of the day, you’ve got to get the virus under some sort of control before you start resuming normal activity.”

* Without sports to bet upon and no casinos in which to play, day-trade investors are speculating more on the stock market. Robinhood says it has seen “historic participation and activity” with exponential increases from February to March. “Retail tends to sell sudden shocks that cause incremental unemployment because, well, fear is a powerful motivator to action and many investors want liquidity in case they lose their jobs,” explained DataTrek‘s Jessica Rabe. Beneficiaries include Aurora Cannabis, Ford, General Electric, Disney and GoPro. Rabe likens the jolt of “holding a hat-sized stock into an up 3% open on the S&P” to the high of having a full house in poker. If you can eke out a lean second quarter, gaming stocks are priced to move right now. Why not take the plunge?

* Coronavirus was good for business at live-dealer online casino Evolution Gaming. First-quarter profit was up 90% as business went through the roof. Experts predicted this kind of phenomenon and we’re seeing it borne out. Pandemic-driven Asian markets led the way, as revenue tripled, followed by North America with a 54% increase. The United Kingdom actually underperformed, strangely enough. Evolution’s Pennsylvania studio is on hold until sometime late this year.

* Churchill Downs‘ first-quarter report “reflected fairly strong operating trends” prior to casino shutdowns, according to JP Morgan analyst Daniel Politzer. $253 million in revenue represented a 5% slippage from 1Q19, which is pretty impressive all things considered. CHDN’s $701 million cash on hand is “ample liquidity,” although Churchill Downs has drawn down all but $6 million of its line of credit. Indeed, with a $20 million monthly cash burn (enough to last it for years), Politzer estimates that the company can continue to spend on growth-directed projects.

One of those is a $13.5 million smoking patio at Derby City, newly announced, with 195 “historical racing” terminals. Oak Grove racino is said to be “on track” on a September opening, while CHDN is putting $38 million into Turfway Park. Something has to give and it’s going to be maintenance. Derby City is real cash-flow engine, so one can hardly quibble with the additional investment. Online-wagering revenue was actually up, at $68 million, “various racetracks are still conducting live races, and there is limited competing sports content to bet on remotely,” making up for a 12% decline in casino winnings.

Jottings: Jobless claims in Massachusetts represent 24% of the Bay State’s entire workforce, including three casino staffs … Missouri has given Scientific Games a one-year bump in its contract to supply instant games to the Show-Me State’s lottery … Wynn Resorts is providing free Covid-19 testing to its employees, in conjunction with University Medical Center. A new lab at UMC has the capability to perform “thousands” of tests per day. Wynn has also seconded 70 call-center employees to Clark County to assist with contact tracing … Lawrence Ho has liquidated his last 10% in Crown Resorts, ending what is described as a “disastrous” foray into Australia‘s gaming market. Blackstone Group picked up the shares at a $328 million loss for Melco Resorts & Entertainment. Cost-cutting is the rule now at Melco. Ho has foresworn his salary, sacked nine top execs and more cost cuts are on the way. Exiting, Melco collected a $20 million Crown dividend, even as the latter’s employees are hitting the breadlines … GameCo has received regulatory approval to deploy its skill-based slots in Nevada.