As the coronavirus epidemic spread across the U.S. and President Donald Trump declared a national emergency, at press time for GGB News on Sunday, four states have banned gatherings of at least 100 people, forcing casinos in those states to close. Casinos in Pennsylvania, Ohio, Massachusetts and Indiana closed over the weekend in response to these orders. In California, two of the most successful casinos, San Manuel and Pechanga, closed for two weeks.
Meanwhile, shares of major Las Vegas gaming companies suffered their worst declines since the 2008 financial crisis as fears mount that the Covid-19 virus will disrupt the tourist and convention trades that are the city’s lifeblood.
For investors, there was perhaps no more striking indication of how bad things are than the fact that the major Strip hotels are not sold out, as had been expected, for next month’s NFL Draft. In fact, room rates actually were being slashed last week , ahead of the much-hyped event—at some resorts by more than 80 percent, according to news reports.
“If you’re canceling a trip for work, you’re less inclined to visit for personal (reasons),” Macquarie Securities analyst Chad Beynon told the Las Vegas Review-Journal. “There’s a lot more supply of rooms than we thought.”
Organizers of several major conventions were saying their gatherings are still a go, but last week’s Con Expo Con/Agg show ended a day early due to virus concerns.
Other big shows𑁋CinemaCon, the Channel Partners Conference & Expo, the Association of Southeast Asian Nations and major events planned by Adobe, Aruba Networks and NXT Global, NAB, the National Association of Broadcasters𑁋have been postponed. The fear is that more would follow.
Last week, Wynn Resorts suspended all large gatherings at its two Strip hotels and at Boston Harbor (which was forced to close after Massachusetts banned larger gatherings), including buffets, showrooms and nightclubs. CEO Matt Maddox stated, “Every scientific and health authority I’ve spoken to has focused on the need for social distancing, which is to say, creating sufficient space between each of us to impede the spread of the coronavirus. This isn’t simply a good idea; it is essential, and not forever, but certainly for now.”
The contagion could have dire implications for a city whose conventions and meetings business generated $6.6 billion of direct economic activity last year and drew more than 6 million visitors.
“This is big,” Clark County Commissioner Lawrence Weekly told the Nevada Independent. “This is bigger than what we think it is.”
How big, experts say, is too early to tell. What was known last week was that Covid-19 had spread to 46 states from its origins two months ago in China, where more than 80,000 people have been infected and more than 3,000 have died.
While seemingly confined to East Asia at first, the disease has since spread through Europe. More than 1,000 have died in Italy, which is in a state of lockdown. Last week, the Trump administration imposed a 30-day travel ban on 26 nations of the European Union, except the U.K. and Ireland, which account for around 9.5 percent of international visitation to Las Vegas. Factoring in visitation from China, which is under a similar ban, and virus-related disruptions to travel being witnessed across East and Southeast Asia, the hit is likelier to approach 20 percent.
The number of infected Americans has spiked to more than 1,650, the seventh-highest tally in the world. At least 41 of them have died. Amid reports that the country lacks adequate capabilities to test for the disease or hospital space to deal with anything of epidemic proportions, several states are now prohibiting large public gatherings. At least eight have closed all or some of their schools. Disney is closing its theme parks. New York City has declared a state of emergency, cancelling its St. Patrick’s Day Parade. Broadway has gone dark.
As the fallout spread to the sports world, the pain in Las Vegas will likely worsen. The PAC-12 has canceled its men’s basketball tournament, slated to be held on the Strip this month at MGM Resorts International’s T-Mobile Arena. Betting on the NBA is off; the league suspended the remainder of its season after a player with the Utah Jazz was identified with the disease. March Madness, the NCAA’s hugely popular men’s basketball tournament, a major visitation and betting event for the city, is canceled.
Later, all major sports also suspended their seasons or delayed the start of a new season. The NHL, MLB, Premier League, the PGA Tour, and dozens of other leagues have been affected.
And it seems more and more likely that the NFL Draft, scheduled for late April in Las Vegas and estimated to attract 1 million people, will also be cancelled and replaced by a remote draft. Las Vegas may be able to host the draft in two years.
More than anything, though, it’s the momentum of the contagion’s spread that’s surprised nearly everyone.
Cory Morowitz, principal of Morowitz Gaming Advisors, told GGB News, “This has been all of sudden, just in the last couple of weeks. There was a lag between what was happening in Asia and Europe and what was happening here. We saw no impact, no measurable changes in consumer behavior.
“Now, we’re seeing real impacts𑁋on the gaming industry, on leisure and hospitality, on travel. Operators are starting to see some changes in visitation patterns. Event cancellations are heating up. This is going to have a real, meaningful impact on operators, especially those that are highly leveraged.”
MGM has been a mission the last year to boost its share valuation. It’s sold off marquee Strip casino real estate and laid off thousands to pay down some $15 billion of long-term debt, fund share repurchases and bankroll a planned megaresort in Japan. Then last week, the company announced that an out-of-state guest at the Mirage had been diagnosed with Covid-19 and was being hospitalized. An announcement followed days later that a plan to redeem $1.25 billion worth of shares had been canceled. The stock (NYSE: MGM), which is down roughly 50 percent year to date, plunged 10 percent on the news.
“To date, efforts to contain the virus have resulted in cancellations or postponements of major conferences, festivals, and sporting events as well as a reduction in broader travel demand in Las Vegas and across the globe,” said Chairman and CEO James Murren in explaining the company’s decision to terminate the offer. “As a result, our domestic resorts have been impacted in the near term primarily driven by increased cancellations in our hotel and convention bookings in Las Vegas particularly during the months of March and April. In light of these trends, we are actively managing our costs to help protect our margins.”
Gaming shares were down more than 38 percent year to date, according to Innovation Capital’s latest index of 14 large-cap and regional operators. This is in line with the virtual freefall that’s gripped the major U.S. indices, all of which are now firmly mired in bear territory after plummeting the last two weeks at levels that haven’t been seen since the 1987 crash.
Over the last month, here’s what the casualty list of Las Vegas’ major operators looked like. (This includes Eldorado Resorts, which is slated to close this spring on its $17.3 billion acquisition of Caesars Entertainment, and of course the three large caps𑁋Las Vegas Sands, MGM and Wynn𑁋that are heavily dependent on virus-wracked Macau):
- Boyd Gaming (NYSE: BYD), down 57.6 percent
- Caesars (Nasdaq: CZR), down 46 percent
- Eldorado (Nasdaq: ERI), down 77.4 percent
- Golden Entertainment (Nasdaq: GDEN), down 67.3 percent
- Las Vegas Sands (NYSE: LVS), down 36.3 percent
- MGM Resorts International (NYSE: MGM): down 54.2 percent
- Red Rock Resorts (Nasdaq: RRR), down 72 percent
- Wynn Resorts (Nasdaq: Wynn), down 49.5 percent
“We know this is going to be a particularly difficult time for the industry,” Innovation Group Senior Vice President Brian Wyman said on a Thursday teleconference monitored by GGB News. “Markets are incredibly volatile.”
The firm issued a report that summarizes the uncertainty:
“The need and desire to gauge the potential impacts of the virus on these sectors is ubiquitous, yet the information available to study its effects remains very limited. This is complicated further by the near daily evolution of information and the situation.”
In the search for precedents to try to light the way forward, the report turns to the SARS epidemic of 2003. Only that comparison quickly breaks down.
SARS “peaked in April and May, but was largely over by June of that year,” the report states, not to mention that “The scope of SARS was significantly smaller, by a factor of more than 10, compared to COVID-19 to date.”
Morowitz takes the long view. “I think people are adjusting their behavior until this stabilizes and they know more about what’s going on. Once that gets under control, and there’s more information, we’ll find equilibrium. People have short memories. We will get back to demand. Right now, because of the enormous uncertainty, if you’re a casino operator you’ve got to marshal your cash.”
Innovation Capital President Matt Sodl went further, saying a “likely recession” is on the horizon, “if we’re not already in it.”
“Every operator should be pushing for covenant relief, as it’s going to get pretty ugly for the next quarter or two.”
State Shutdowns
Casinos in Illinois will shut down for two weeks starting on Monday, under orders from the state gaming board.
“The public health of patrons, casino employees, IGB staff, and others is of paramount importance,” according to a release from the board. “The board is continuously monitoring developments and will update licensees and the public as frequently as possible.”
In Pennsylvania, several casinos were forced to close because of specific directives in the counties where they operate. Boyd Gaming’s Valley Forge casino was one. But other casinos felt obligated to close, such as the Rivers Casinos in Philadelphia and Pittsburgh. Hollywood Casino near Harrisburg will remain open, with specific cleaning regimes, and most of the other casinos are also staying open. ,
The next day, a state directive forced all Pennsylvania casinos to close.
In Massachusetts, Gaming Commission decided to temporarily suspend operation at the state’s three casino properties: Encore Boston Harbor, MGM Springfield and Plainridge Park Casino.
“In response to the coronavirus pandemic, the decision was made in collaboration and cooperation with our licensees to safeguard the health and well-being of casino guests, employees, and regulators,” said a statement released by the commission.
Ohio casinos closed indefinitely as Governor Mike DeWine gave them until Friday at midnight to close their doors.
Indiana followed suit on Saturday, and other states were expected to join in by early this week.
Meanwhile, In Macau
The impact of the Covid-19 virus has been widespread, but seems to be easing up in China, where it originated, and in Macau, which was forced to close its casinos for 15 days at the peak of the contagion.
As of last week, all but one of ’s 39 operating casinos were back in business, and gaming floors were slowly returning to normal amid the cleaning and disinfecting of gaming areas, health screenings for all entering customers, and restrictions on table spacing and players per table.
Increases in visitation, though small, were hopeful signs after a horrific February, in which travel from China was virtually halted and gaming revenues plummeted more than 87 percent. The casinos reopened February 20. Since then, visitation has averaged about 50,000, a far cry from 2019’s daily average of 108,000.
“The operators we have spoken with do not see any clarity on timing of recovery at this time,” brokerage Sanford Bernstein said. It forecasts that revenue will be down between 75 and 80 percent in March, “assuming no significant improvement in visa issuance and travel.”
The local government, which depends on gaming revenue for around 80 percent of its funding, expects the year will end in the red by some MOP40 billion (US$4.9 billion), down from a 2019 surplus of MOP51.4 billion.
But the shortfall will be handled, said Secretary for Economy and Finance Lei Wai Nong, who noted the city has accumulated vast reserves over the 20 boom years since the casino market was liberalized.
“Although we see Macau has controlled (the virus) relatively well, and mainland China has also seen some good progress, I think optimistically we can only slowly get back on our feet in the summer months, and then hope for a strong rebound in the final quarter of the year,” said Kevin Ho, a director of Tai Fung Bank.
In Atlantic City
As of last week, the East Coast Gaming Congress (ECGC) was still scheduled for April 27-28 at Harrah’s Atlantic City. But the Metro Athletic Association suspended the rest of its conference championships in the shore resort, and the Atlantic Builders Convention, another staple, scratched its April 1-2 conference.
“The industry is taking appropriate measures to ensure proper protocol is being followed as directed by national, state and local professionals at the Centers for Disease Control, New Jersey Department of Health and AtlantiCare,” said Steve Callender, president of the Casino Association of New Jersey. “We are ready to adopt any necessary recommendations.”
At Hard Rock Hotel & Casino Atlantic City, that meant increasing the rigor of cleaning and sanitizing procedures, said President Joe Lupo, offering disinfectant wipes if requested, and keeping plenty of hand sanitizers throughout common areas.
“We will continue to review our policies and procedures with the aim of strengthening our Covid-19 response,” Lupo said. “We want to ensure you can book your hotel stay with confidence. If you need to modify your travel plans, which include a hotel stay at Hard Rock, we will refund you for reservation charges associated and will not require a cancellation fee until further notice.”
ECGC organizers were working with Harrah’s, a Caesars Entertainment property, to ensure all necessary health precautions are in place. Caesars CEO Tony Rodio said, “We are buying more cleaning and disinfectant supplies and increasing the frequency of cleaning on high-touch surfaces in public areas, including restaurants, bars, spas, fitness centers, public restrooms, hotel rooms, elevators, as well as the casino floor.
“We have also suspended international business travel to areas with higher infection rates. And if any of our employees travel to those areas for personal reasons, they will be required to stay home for three weeks upon their return,” he said.
If employees come to work with flu-like symptoms, they will be asked to seek medical attention and remain at home until symptoms subside, Rodio said. “We are also encouraging guests who are ill to seek medical attention and to avoid public exposure as much as possible.”
The virus is bound to take a toll on AC, but the effect won’t be known until mid-April and May, when figures are released for casino revenues, hotel occupancy, and traffic, among other statistics.
“If the spread of the virus doesn’t slow as we enter the summer peak season, it could become a concern for many tourism businesses, including the Jersey Shore,” said Rummy Pandit, executive director of the Lloyd D. Levenson Institute of Gaming, Hospitality & Tourism at Stockton University. “Places where large numbers of people gather (i.e. hotels, restaurants, concerts, conventions, amusement parks and casinos) could see reduced attendance or be required to close.”
Conferences Cancelled, Postponed
The 2020 Indian Gaming Tradeshow and Convention in San Diego, scheduled to be held March 24-27, has been postponed.
“The health and safety of our tribal gaming attendees are of paramount concern and postponing the Indian Gaming Tradeshow, for now, is the safest course of action,” said National Indian Gaming Association Chairman Ernie Stevens, Jr. “Our board of directors and association staff will work diligently on the best path forward for all impacted attendees in light of this postponement.”
The 15th annual World Game Protection Conference (WGPC) which was to have taken place March 23-26 at the Tropicana in Las Vegas, has been rescheduled for October 5-8, the same week at the Global Gaming Expo is held at the Sands ExpoCenter.
Organizer Willy Allison told GGB that many of his attendees have never been to G2E so they get the opportunity to do so in October.
“Surveillance executives rarely get to travel twice a year,” he said. “So this year, they’ll be able to take in both the WGPC and G2E.
The Betting on Sports America (BOSA) conference, which had been slated for April in New Jersey, will instead be held December 1-3 at the original location, the Meadowlands Exposition Center in Secaucus, New Jersey.
SBC Events said all BOSA tickets will be transferred automatically to the new date. “The changing situation and the fact that an increasing number of industry organizations are introducing their own travel bans for staff, means that Betting on Sports America would have been severely impacted had we not made the decision to postpone it to the new dates in December,” said the producers.
Global Gaming Expo (G2E) Asia 2020 has been postponed until July 28-30. But that conflicts with a rescheduled date for the ASEAN Gaming Summit conference in Manila. Asian Gaming Brief, the organizers of ASEAN, were contemplating a different date at press time.
G2E Asia, put on by the American Gaming Association and Reed Exhibitions, has been held since 2013 and is considered by some to be the most important trade show in Asia.
Michael Cheers, sales director for Asia for International Game Technology, told GGRAsia, “We approved the change of date to July, and trust that business will be starting to return to normal by July.”
Angela Ng, marketing manager for Weike Gaming Technology, also supported the postponement, adding, “There are lots of uncertainties, slowing down of activities, reduction of spending, discomfort in travelling etc., which would highly affect the event turn-up rate if it were held too soon.” Ng added that it would be “challenging” to participate in two such events in one year.
And Elsewhere
Wynn Resorts said it will check the temperatures of guests suspected of being ill using non-invasive temperature gauges.
Wynn Resorts, which operates Wynn and Encore in Las Vegas and Encore Boston Harbor (since closed by the state order), issued this statement: “Safeguarding the health of our guests and employees is of the utmost importance. We have started to take the temperature of guests who are exhibiting symptoms of illness—coughing, sneezing, sweating, etc. With their permission, we are (discreetly) taking their temperature with a non-contact, digital thermometer.”
Those with temperatures higher than 100 degrees will be asked to leave the casino and encouraged to seek medical attention, said the Wynn statement.
Employees are also forbidden from coming to work with any contagious respiratory ailments.
MGM Resorts International shut down Yonkers Raceway in suburban New York City March 10 after a worker with the Standardbred Owners Association tested positive for the coronavirus and passed away. Employees who worked in the immediate area were asked to self-quarantine, according to CDC Gaming Reports.
The victim was identified as John Brennan, a New Jersey resident.
MGM said the racetrack and the company “will continue to coordinate with and follow the guidance of health officials and support them in their response and prevention efforts.”
Late Friday, the company reported that an employee at Luxor in Las Vegas has tested positive for the virus. In a note to employees from MGM Resorts President and COO Bill Hornbuckle, he said co-workers and guests who have had contact with this employee would be notified and tested.
“We are working with the health district to address these cases as quickly as we can,” said Hornbuckle.
At the same time, because of a significant drop in business, employees would be offer flexible time off (FTO). He said more than 150 food and beverage outlets would be closed, as well as some rolling closures. All these aspects will require some layoffs, he said in the note.
“These decisions are never made lightly, and we deeply regret the hardship it will place on these individuals and their families,” Hornbuckle wrote.
The American Gaming Association has signed a statement co-signed by a coalition of travel and hospitality-related organizations on the coronavirus threat: “For the travel and hospitality industry, the safety of the traveling public, our guests and our employees are of the utmost importance. We are in daily contact with public health authorities and are acting on the most up-to-date information on the evolving coronavirus situation.”
The statement continued: “Health and government officials have continually assured the public that healthy Americans can ‘confidently travel in this country.’ While it’s critically important to remain vigilant and take useful precautions in times like these, it’s equally important to make calm, rational, and fact-based decisions.”
The statement emphasized that, despite alarming headlines, the overall risk of contagion from the coronavirus is low, though older persons at risk “should take appropriate precautions.”
It concluded, “The latest expert guidance indicates that for the overwhelming majority, it’s OK to live, work, play and travel in the U.S.” The group promised to keep open lines of contact with the Centers for Disease Control and Prevention, the U.S. Departments of Homeland Security and Health and Human Services.
Italians Banned
King’s Casino in Rozvadov, Czech Republic, the site of Europe’s largest poker room and home of the World Series of Poker Europe, has banned Italian players as a safeguard against the coronavirus.
Italy has been one of the countries hardest hit by the outbreak, according to the U.K. Financial Times. With 2,502 documented cases, according to Johns Hopkins University, only China, South Korea, and Iran have had more confirmed cases.
In an announcement on its Facebook page, the property stated, “To preserve the health of its international clientele, and to prevent the spread of Covid-19, (King’s Casino) has decided to limit access to all areas of the casino as well as to not accept any hotel reservations made by Italian residents.”
Indian Country
Clearly, all tribal gaming properties are exercising the same level of caution to ensure their employees and guests remain healthy. In Southern California, two of the major casinos in the region decided to close until April. Pechanga casino in Temecula and San Manuel casino in Highland have suspended operations.
“The San Manuel Band of Mission Indians wholeheartedly stand with all of those directly and indirectly affected by Coronavirus (COVID-19), as countries and communities face unprecedented challenges and difficult decisions,” in a statement released by the casino. “San Manuel Casino has been closely following the news of Coronavirus as reported by the Centers for Disease Control and Prevention (CDC), the World Health Organization (WHO) and our local public health agencies. The health and safety of our guests, team members, and Tribal Citizens is our highest priority. We have volunteered to temporarily suspend casino operations effective at 5 p.m. on Sunday, March 15 through the end of the month. In consultation with the State of California and in consideration of the Governor’s guidance on large gatherings, we feel this is the best course of action for our community.”
“As a tribal government and major employer of thousands of people, we have made the difficult decision to temporarily close Pechanga Resort Casino for the health and safety of our team members, tribal members, and guests due to the COVID-19 pandemic,” Tribal Chairman Mark Macarro said in a statement. “No matter what, the Pechanga family will rise to this challenge together with the strength, compassion, determination, and resilience that our ancestors instilled in us.”
Both casinos said they would continue to pay employees during the period. Several large card rooms in Southern California have also suspended operations, include the Bicycle casino, Hawaiian Gardens and Hollywood Park.
In New Mexico, the Navajo Nation Gaming Enterprise is proactively planning and taking precautionary measures, said Brian Parrish, Navajo Gaming interim CEO.
“We have significantly enhanced our cleaning and sanitation efforts on all guest and employee touchpoints, as well as providing an abundance of alcohol-based hand sanitizers throughout all areas of the property and casino floor,” said Parrish. “Finally, we are frequently cleaning and disinfecting all machines, restrooms, hotel rooms, food locations and employee break areas.”
All property buffets, a self-service aspect of dining can be an increased risk of virus transmission, therefore will be closed immediately until further notice.
And Snoqualmie Casino near Seattle announced that it will remain open following a call with Washington Governor Jay Inslee. Inslee made it clear that he did not expect casinos to close, though he did call for a suspension of concerts, sporting events and other large public gatherings.
Snoqualmie Casino Interim CEO and President Stanford Le said, “Our top priority is the safety of our guests and team members and we will continue to work with the CDC and local government to implement safeguards against Covid-19.
