Saying “This is not the time to look for loopholes,” Nevada Gov. Steve Sisolak (D) doubled down on his quarantine order, threatening nonessential business that remain in business in defiance of his directive 
(and there have been some) to close up shop or face legal consequences. “I repeat, if you’re not an essential business, I’m using my power as governor under an emergency declaration to order you to close,” Sisolak said in a teleconference. “If businesses defy this directive and stay open, state and local law enforcement will have the ability to treat this as a criminal act.” Local governments are given discretion as to what fine or other punishment to levy.
Sisolak’s iron fist was brought down by scofflaws like Little Darlings strip club (whose activities were reported in S&G earlier) and Downtown‘s Heart Attack Grill, which thumbed its nose at public safety, proclaiming, “non of this whimpy [sic] ‘take out only’ crap!” (Other restaurants are finding ingenious, remunerative and legal ways to stay in business.) On the more-clement side, Sisolak eased rules for unemployment-insurance applicants and announced a special enrollment period for Silver State Health, adding, “If you need health insurance, do not wait.” At latest count Nevada had 109 Covid-19 cases and two deaths.
Panicky public officials—like Las Vegas Mayor Carolyn Goodman—who are in a rush to get back to ‘normal’ (calling for a slim, one-week quarantine, Heaven help us) need to read this sobering interview with National Institutes of Health Director Francis Collins. For instance, did you know that “even flat out for a vaccine means we’re a year to a year-and-a-half away. And that would be breaking the record by a factor of three or so given how long it usually takes to get something fully ready to be distributed to the public.”
A measured view was taken by JP Morgan analyst Joseph Greff, who wrote, “The recent wave of mandated casino closures is unprecedented and unfortunate, but necessary.” The downside, in part, are the fixed costs that casinos will have to carry, regardless. Added Greff, “Our conclusion is that larger cap stocks are better positioned in terms of liquidity to weather this downturn and survive, but if these trends persist for an elongated period (greater than a year), it will be troubling.” Ironically, Macao-exposed companies are expected to come out best, followed by Las Vegas Strip operators and then by regional ones. (We’re looking at you, Eldorado Resorts.)
How much is it costing to pay the house nut? $13 million a day if you’re MGM Resorts International, $7.5 million for Las Vegas Sands, a 
surprisingly low $5.5 million for far-flung Penn National Gaming (Penn incidentally, halted construction on Hollywood Casino Morgantown and Hollywood Casino York in Pennsylvania. Said CEO Jay Snowden, “We also believe it’s prudent to revisit any and all capital expenditure commitments in order to help preserve liquidity in light of the impact of COVID-19 on our business.”), $5 million for Wynn Resorts, Boyd Gaming $2 million and Station Casinos $1 million, and less than a million for Churchill Downs and Golden Entertainment. As for cash reserves, MGM has $4.4 billion, Sands over $8 billion, Penn $967 million, Wynn $3.6 billion, Station $551 million, Boyd $907 million, Golden $324 million and Churchill Downs $791 million. Keep in mind that fixed costs are 40% of the budget for a Strip resort and 30% of a regional casino.
“You have to make sure money is flowing to your employees—they’re your critical resource,” Innovation Capital‘s Matt Sodl counseled Global Gaming Business. “It’s hard to find and keep good people. So they’re going to prioritize their employees, first and foremost. Casino operators will be stepping up and making sure their employees get paid. One hundred percent.” (Or not?) Global Market Advisors Principal Steve Gallaway took a gloomier view, saying, “I don’t think necessarily it’s a long-term problem. But we don’t know. If it last longer than two months, we’re going to see a lot of bankruptcies and a lot of corporate restructurings.”
Cirque du Soleil went dark on its workforce yesterday. 95% of its 4,679 were laid off. “This was an incredibly difficult decision for the Group,” said Cirque, “but a necessary measure to stabilize the company for the future.” No word on how contortionists are out of work.
From the Department of Employment, Training & Rehabilitation, “For the week of March 14, 2020 initial claims rose to 6,356, nearly triple the number of claims in the prior week, and the largest week-to-week increase dating back to at least 1987, when current records begin.” We think that speaks for itself.
* We know that online betting sites are starved for content but Bovada may be taking it a bit far. One of its prop bets is, “Will PornHub be among the top 30 most-visited sites in the USA before April 1, 2020?” PornHub is at #37 in case you’re wondering. Reports Casino.org, “With couples quarantined around the world, bettors can predict what the stock price of the manufacturer of Trojan condoms will be at the close of trading on March 31. The over/under for the Church & Dwight share price is at $65 (Over-140, Under +100).” Bovada is also taking over/under on casino stock prices and on which airline will file for bankruptcy first (as well as the Westworld season finale). Most disturbingly, oddsmakers are only 82% convinced that the November election will take place on schedule. That’s uneasy food for thought.
* There’s almost nothing left upon which to bet at DraftKings. However, hard times aren’t deterring the sports-wagering provider from moving ahead with an IPO. Mergers with SBTech and Diamond Eagle Acquisition Corp. have to be completed first. This may be a good time to get in on the company, which lost $143 million last year and is debuting in a depressed stock market.
* It arguably took awhile but Seminole Tribe casinos in Florida shut down at 6 p.m. yesterday. Said the tribe by way of explanation, “This decision was not taken lightly as Seminole Gaming employs nearly 14,000 Seminole Gaming team members in the state. The goal has been to protect their livelihood without jeopardizing public safety. We have now reached a point where we do not feel comfortable taking that risk.” Good for them.
