Casino closures sweep the country

We’re all going through what are called “adjustment reactions,” including casino executives across the country. They’d like to stay open for business—many are—but others are being forced to close or making the difficult choice to go dark on their own. Shareholders won’t like it but it shows courage. (Points to remember about an adjustment reaction: “It is automatic. It comes early. It is temporary.”) Said an S&G source, “It’s crazy here in Las Vegas. We are literally competing to get food. It’s ridiculous. The food bank said they may lock our area down as we are right behind the Strip. All store deliveries stopped. All store pickup stopped with a few exceptions.  Can’t find [toilet paper] period. I’ve never seen anything like this.”

Casino stocks are having adjustment reactions of their own: Caesars Entertainment -12%, Las Vegas Sands -9%, MGM Resorts International -22%, Wynn Resorts -15.5%, Eldorado Resorts -15%, Boyd Gaming -1.5%, Station Casinos -26%, International Game Technology -10%, Scientific Games -29% and Melco Resorts & Entertainment -6%. No surprise, the NFL Draft, scheduled to be held in the Bellagio lagoon, has been cancelled. Room rates on the Strip were already 56% from this time last year, with the average rate plunging from $295/night to $130. Weekday rates, up 19% in March 2019, were down 62% when last checked. All the major operators took a hit, Venelazzo worst of all.

MGM bit the bullet and closed all its Las Vegas Strip casinos today, with its hotels to follow tomorrow. In an internal memo, MGM left the door open to a Tuesday resumption of gambling: “For Casino employees (including Table Games Dealers, Floor Supervisors and Slot Guest Services Representatives) do not come to your property for any shift that begins on Tuesday unless your Manager or Workforce Management specifically directs you to do so.” [emphasis added] Salaried employees remain on the job “until further notice.” Full-time employees who are laid off or furloughed will receive two weeks pay. Employees on the company health plan will continue to enjoy benefits through June 30. The drastic decision was made “After consultation with our elected leaders and public health officials.” MGM has had two confirmed cases of Covid-19 in its Vegas workforce. The company begins taking reservations again on May 1. In the meantime, JP Morgan projections that Strip hoteliers will see rates fall 3% on weekdays and 7% on weekends in 2Q20 just went into the shredder  (and 1Q20 numbers weren’t looking that great).

In a press release, CEO Jim Murren said, “Despite our commitment to dedicating additional resources for cleaning and promoting good health, while making difficult decisions to close certain aspects of our operations, it is now apparent that this is a public health crisis that requires major collective action if we are to slow its progression,” adding, “Accordingly, we will close all of our Las Vegas properties as of Tuesday, March 17^th, for the good of our employees, guests and communities. This is a time of uncertainty across our country and the globe and we must all do our part to curtail the spread of this virus. We will plan to reopen our resorts as soon as it safe to do so and we will continue to support our employees, guests, and communities in every way that we can during this period of closure.” Wynncore follows suit tomorrow at 6 p.m. While CEO Matt Maddox estimated an April 1 reopening, all non-essential employees were told to stand down. While Maddox’s memo made no mention of pay or benefits, its primary emphasis was that employees stay as healthy as possible.

Caesars Entertainment is scrapping all live performances but staying open otherwise. However, it could not prevent the effects of Coronavirus from fanning outward: “Based on changing circumstances and in the interest of public health, Horseshoe Hammond will be closing for at least 14 days beginning at 6:00 a.m. on Monday, March 16, 2020.” It’s not a voluntary move. Indiana gaming regulators are shutting down all racinos and casinos in the state, as of earlier this morning. “This decision is a precautionary measure,” Caesars stated, assuring guests, “There have been no reported cases of COVID-19 at Caesars Entertainment’s Indiana gaming and racing properties to date.”

Among those government officials taking drastic action was Maryland Gov. Larry Hogan (D), who ordered an indefinite shutdown of the Free State’s casinos, racinos and racetracks. Among the companies for whom this is particularly bad are MGM National Harbor and Maryland Live, who see two of their cash cows idled. Nor is it going to help Horseshoe Baltimore, as it struggles to find an audience. Encore Boston Harbor closed yesterday through March 29. Guests had until midnight to vacate the hotel. Said Wynn Resorts, “The health and welfare of our guests and employees has been our primary concern throughout this health crisis.  Encore Boston Harbor has been operating in excess of the safety recommendations of the U.S. Centers of Disease Control and Prevention.” Massachusetts Gov. Charlie Baker (R) has yet to mandate casino closings, unlike his colleagues in Ohio, Pennsylvania, Illinois and New York, who have ordered statewide shutdowns of casinos and racinos.

Derek Stevens has been proactive at the Golden Gate, shutting down every other slot machine to provide a modicum of safety between players. Roulette games are limited to three players at a time. We applaud Stevens’ moves, part of many Macao-style countermeasures we are sure to see in Sin City. Meanwhile, layoffs are going underreported in the media. However, there are enough of them that the Nevada Department of Training & Rehabilitation has expanded its office hours to deal with the caseload. Phone lines will now be open from eight to eight … and of course you can always file online.

At least some conference organizers are keeping their powder dry. Casino Journal just starting taking registrations for its Loyalty Player Development Conference (July 13-14) and its Casino Marketing & Technology Conference (July 14-16). Caesars Palace is to be the site of both. Allied Esports, however, canceled its “Saturday Night Speedway” at Luxor and pulled all its events out of the casino until March 28. Allied Esports planned to keep its walk-up gaming lobby open until MGM overruled it.

* In an extreme effort at economic stimulus, the Federal Reserve is allowing banks to have zero reserve-requirement ratios. That’s like giving free heroin to a junkie. Even so, it didn’t work. “The Fed’s actions were very bold and it does appear to have spooked the markets,” said Nate Thooft of Manulife Investment Management.