Boyd opens its wallet, stringency at Scientific, improvidence at MGM

Boyd Gaming, which had previously been reported to be giving two weeks pay (misreported as one week by the Las Vegas Review-Journal) to employees idled in Las Vegas by the one-month casino shutdown, has gotten “george” and extended the hardship pay through April 10. Ditto health benefits. Cautioned CEO Keith Smith, This is a highly fluid situation, and it is too early to determine at what point we may be able to resume operations at each property.” Workers will still have to cannibalize paid time off to scrape by the week between the cutoff of severance pay and the April 17 scheduled resumption of business, but this is a praiseworthy move nevertheless, as is Boyd’s suspension of dividend payments.

It’s certainly a more time-sensitive one that the recommendation of MGM China to—Ka-ching!—pay out $41 million in dividends. Hello? Heard of Coronavirus? The thing that shut your casinos down for 15 days and has caused business to become a shadow of the past? This is not the time to throwing cash around like drunken sailors. You might need that 16% of your profits later. “MGM China’s announcement comes as Macao’s casino market faces a challenging business environment related to the negative impact of the Covid-19 pandemic on operations,” reports GGR Asia, citing projections of 31% less gaming revenue and 50% lower cash flow. (Compulsory mask-wearing, mandatory temperature scans, and suspension of traditional table-side F&B service won’t create a party-hearty atmosphere.) The penny drops in the next paragraph, in which is revealed that 56% of the dividend goes right to MGM Resorts International: a backdoor cash infusion. Meanwhile, says Ben Lee of IGamiX Management, “With the mainlanders and Hong Kongers now effectively barred from entering Macao, the only rationale possible for keeping the casinos in Macao open right now is a social one which is to keep Macao residents employed.”

MGM should bear that in mind—Wynn Macau did, suspending dividends in light of ongoing financial uncertainty. Not that the company is in danger of running low on money. It has $1.8 billion cash on hand and can tap credit lines for another $401 million. Wynn wrote it “will be continuously monitoring the situation and market conditions in Macau and Greater China, and may consider a special dividend in the future when such conditions have stabilized.”

It’s not just casinos: The new recession is going through the jobs market like a scythe. The University of Washington has good news—the Coronavirus pandemic should peak in two weeks’ time—and bad news: The death toll will probably reach 80,000 by mid-July. “If we don’t social distance through May … things will be worse,” said the University’s Christopher Murray. “The trick is figuring out how we make some kind of adjustments going forward that minimize the risk but still enable economic activity and other aspects of normal life to resume,” added University of Notre Dame epidemiologist Alex Perkins.

* Arizona‘s casino industry has pretty much closed up shop, although with multiple sovereign nations involved, there’s no one-size-fits-all policy. Twin Arrows Casino Resort in Flagstaff reopens April 6. By contrast, Gila River Indian Community has shuttered its three casinos through April 30.
Ak-Chin Indian Community says it, not Caesars Entertainment, made the call on the shutdown of Harrah’s Ak-Chin, which appears to be indefinite. Talking Stick and Casino Arizona are set to reopen after April 30, while Desert Diamond Casinos & Entertainment‘s four properties are looking at an April 24 resumption. Champing at the bit, the Yavapai-Prescott tribe is looking to reopen its two casinos on April 4, while Cliff Castle and Fort McDowell Casino are dark until further notice. Unlike some of his colleagues, Gov. Doug Ducey (R) is pursuing an aggressive shelter-in-place policy and is to be commended for it.

* Over in Oklahoma, the Muscogee (Creek) Nation is extending its casino closures through April 15, while the Cherokee Nation is waiting at least two days longer. Employees will still be paid. “Unfortunately, we don’t know when it will be safe for operations to resume,” said Cherokee Principal Chief Chuck Hoskin Jr., adding, “with the guidance of federal and tribal health experts, we are working to determine our next best steps.” Despite Gov. Kevin Stitt‘s indifference to the health crisis, local shelter-in-place orders seem to be being observed with a vengeance, judging by the ghost-town photos in the Tulsa World. (Scroll to bottom of story.)

* Scientific Games is feeling the Covid-19 pinch and has instituted cost-reduction policies. The include reductions in pay and hours. But the sacrifice is going all the way to the top, where CEO Barry Cottle is forfeiting his 2020 salary and other executives are taking a 50% hit. Leading by example, Cottle also donated to the company’s Hardship Relief Fund “to provide short-term assistance to those employees and their immediate families who incur unexpected and onerous personal, family, or living expenses as a result of the COVID-19 crisis.” Such actions speak for themselves.

Similar stringencies are taking place at Churchill Downs, where top execs are absorbing pay cuts and front-line workers are being furloughed. “This is not a decision any company ever wishes to make, and it is particularly tough when those affected are deeply respected team members who have helped us build great facilities and strong businesses of which we are all very proud,” CEO Bill Carstanjen said. Only two of 12 CHDN properties are unaffected: Kentucky‘s Turfway Park and racino Miami Valley Gaming in Ohio. Thanks to the intervention of deep-pocketed co-owner Neil Bluhm, all workers at Rivers Casino Des Plaines are being paid during Illinois‘ casino closure (at least until April 8), with tipped workers receiving an ‘average’ wage. Resumption of racing at CHDN’s titular racetrack remains clouded with uncertainty.

* Buy! Buy!! Buy!!! That’s Frank Fantini‘s advice regarding stocks in the time of Coronavirus. There doesn’t seem to be any company he doesn’t like as a prospect. In fact, except for some passing doubts about Japan (political in nature), there’s nothing on which he isn’t upbeat. Throwing caution to the winds, Fantini proclaims, “Many [companies] will use this financial strength to survive and recover, and they’ll provide investors with returns of 100 percent, 500 percent, 1,000 percent.”

* Finally, a big S&G ‘thank you’ to Las Vegas Sands CEO Sheldon Adelson. He’s gone above and beyond the call of duty during the Coronavirus crisis and his latest move is similarly “george.” Through his Chinese connections, Adelson managed to get his hands on two million surgical masks, which he is donating to U.S. hospitals. An eighth of them will go to the Trump administration while the rest will stay in Nevada and hot zone New York. Yes, Adelson aspires to a casino in New York City but we’re not going to look this gift horse in the mouth. Also, Wynn Resorts has kicked in a substantial amount of medical supplies, according to Nevada COVID-19 Response, Relief & Recovery Task Force boss Jim Murren, including half-a-million surgical gloves. Politically, Adelson is keeping his powder dry: He has yet to make a contribution this year. But if he keeps up his generosity he’s got a good shot at being our first George of the Year.