It’s becoming clearer by the day that the near-term future is becoming less clear by the day.
No one knows when the Covid-19 restrictions will end, what the costs will be, and how long it will take for the world to get back to normal.
Some predict (hope?) that business returns to normal in the second half of the year. Others say normality will not return until a vaccine is developed, perhaps sometime next year. It would seem that the economy could not withstand such a long closure.
If the much-publicized models prove correct, and the epidemic peaks in the U.S. sometime in May, then businesses reopening by mid- to late summer seems reasonable.
When they reopen, it will probably be at dramatically reduced capacities, because social distancing will likely be enforced for a long time. A bank of eight slot machines might be reduced to four seats, and a bank of six, to two. Fewer chairs at a blackjack table. A restaurant that seats 150 people might be reduced to 75.
Then there will be the question about the willingness of customers to return and to spend. Many will be cautious about setting foot in public places.
One popular line of discussion says that Covid-19 will change the world permanently. People will work from home and the commercial real estate industry will contract. People will get their gambling fixes online rather than risk personal contact in casinos.
The future, they say, belongs to Zoom.
Don’t bet on it.
Human nature was developed over millennia of being hunters and gatherers. It will not change quickly.
Certainly, Covid-19 has been the best marketing event Zoom could ever want, as millions of people are learning about electronic conferencing. It and similar services are poised to thrive.
But human beings are social creatures, and social they will remain. Risk-taking is an essential part of human nature; gambling is atavistic. People need entertainment.
Combine those three elements, and you have people patronizing casinos for the foreseeable future.
Finally, as has been mentioned in this space before, the twin traumas of the Spanish Flu and World War I were followed by the Roaring 20s—with flappers, speakeasies, the Golden Age of Sports and one of the greatest bull markets in history.
So, the question isn’t whether the casino industry will survive and prosper. It’s who the survivors will be, and how long will it take for them to prosper again.
Go Local
One plausible scenario is that locals casinos will recover first, followed by larger regional markets, and last of all, the Las Vegas Strip.
When people are tired of sitting around the house, it will be a relatively easy choice to hop over to the local casino for the night, especially as locals casinos are structured for neighborhood entertainment, with movie theaters, fast-food courts, even bowling alleys and daycare centers in some cases.
Further, locals casinos do not have to bear the expenses of the capacious resorts, especially those on the Strip, with their huge footprints and all those amenities to heat, cool, and maintain.
We’ll look closer at the dynamics of locals, regional and Strip casinos in my next column.
