Casinos in survival mode; Sports betting in Cali in peril

After this week’s stimulus vote in the U.S. Congress, the casino industry would seem to have ducked a bullet. But, depending on how much financial aid it can draw down, the question lingers over whether any operators will have to file Chapter 11. A five-month closure seems improbable at this point but Macquarie Research says that’s how long most of the industry has before running out of cash. That figure is predicated on Penn National Gaming, spending $6.5 million a day just to shelter in place. MGM Resorts International ($14.5 million/day) has nine months, as does Boyd Gaming ($3 million/day). Obviously, those companies that are spending the least per day have the best survival odds, including Full House Resorts (14 months), Station Casinos (ditto) and $1 million/day Golden Entertainment (10.5 months).

“The casino industry was way over-leveraged, so the virus is attacking like a person who was compromised even before contracting the virus,” says Boston College‘s Rev. Richard McGowan, adding, “The debt to equity is public knowledge, and so, given that they will have no cash flow, it is easy to predict when they will run out of cash.” He gives excellent survival odds to Las Vegas Sands and Wynn Resorts but says everyone else is at the mercy of federal intervention. Calling Coronavirus the most serious threat to Las Vegas’ economic health in history, UNLV’s Dr. David G. Schwartz says, “While it will take two quarters of negative growth to officially enter recession, clearly southern Nevada is in economic peril.” Even if casinos reopen on schedule on April 17, consumers have to want to come, locals have to have spending money and airlines have to capacity in place.

Dr. Stephen Miller, director of UNLV’s Center for Business & Economic Research, says moral considerations could militate against doling out money to gaming: “Casinos are a special type of business. Some people would say, we shouldn’t help them.” (Already casinos in Louisiana and Oklahoma are being denied insurance coverage.) He adds, “It’s a huge part of our local economy … If you don’t get visitors here, you’re dead.” Attorney Anthony Cabot predicts tax reductions and, somewhat ominously, regulatory lassitude, saying, “Old regulatory standards for financial reserves and measures for financial viability need to be relaxed.” That sounds like throwing the baby out with the bathwater.

“Obviously it’ unprecedented times,” said William Hill USA CEO Joe Asher. Kudos to him for forming the William Hill USA Foundation to help company employees and donating his own salary to it. You are a george, Mr. Asher. Meanwhile, add Foxwoods Resort Casino and Mohegan Sun to the roster of gaming properties donating their perishable foodstuffs to the at-risk population (which will be eating very nutritiously, judging by the pallets). Mohegan Sun ponied up almost 15K meals, while Foxwoods gave out 18,355. Local food banks are the beneficiaries. At a time when federal programs like Food Stamps are under siege, the casino industry’s generosity is doubly appreciated.

* Things were looking so promising for a California tribal/racetrack petition drive to get sports betting onto November’s ballot. But Gov. Gavin Newsom‘s shelter-at-home order has kneecapped the effort. Proponents say they’re just 10% short of their goal. But they have only until April 21 to get the petition across the finish line and when you can’t buttonhole voters in public that’s a problem, to put it mildly. The initiative has been criticized for not providing mobile wagering and for excluding the state’s card rooms but that all seems very much beside the point now. So it looks like wait until 2022, including for the dice and roulette games that the tribes juiced into the ballot measure.

* Stuck at home with nothing to do? Tempted to spend money online? (Tell me about it!) Parliamentarians in the United Kingdom are urging Internet casinos to cap wagers at $59/day to keep Great Britons from blowing their savings on online play, such as wagers on Japanese baseball. Even “virtual” sporting events are being pressed into service. A tri-partisan group of MPs issued a statement saying, “We are deeply concerned that as we go deeper into this crisis, more and more people will turn to online gambling as a distraction. If the industry were to self-impose a daily limit of £50 … it would be a clear demonstration that the industry is willing to act responsibly and do what they can to protect society and peoples’ finances, at this dreadful time.” However, with all casinos and betting shops closed, it behooves U.K. gaming interests to gather rosebuds where yet they may.

* Now there are only 18 operational casinos in the U.S., Ute Mountain Casino Hotel in Colorado having gone dark. As a community and tribe we had to collectively make swift and proactive efforts to safeguard everyone and help prevent the virus from further spreading and hurting people,” said tribal Chairman Manuel Heart. “By temporarily suspending gaming and closing the hotel, we’re helping to do our part to curtail the spread of the virus and minimize the impact to our community and beyond.” Added a press release, “Employees will not be impacted by the temporary closure and all are due to return when the property reopens next month.” Well handled.

While we’re handing out attaboys, a big one has to go to Horseshoe Hammond. It donated 1,400 N95 masks to local anti-Coronavirus efforts. Six hundred each went to first responders and to Franciscan Healthcare, with the balance going to a local hospice. “We understand
there is a nationwide shortage for available supplies and we didn’t have to think twice about supporting those efforts.” So said Security Director Jimmy Meyer. Recipients were understandably grateful, with Hammond Mayor Thomas McDermott remarking, “On behalf of the residents of Hammond, I want to extend my thanks to Horseshoe casino for donating badly needed N95 masks towards our first responders. These men and women are battling the COVID-19 outbreak on the front lines, and our stockpiles of PPE are running low.” Thanks to Horseshoe, not so low now. Here’s a rundown of what Caesars Entertainment has been doing across the country.