I’ve got more than 30 years of casino operations experience, so, ideally, I’d like to be able to offer some practical advice on how to handle the Covid-19 coronavirus pandemic as it relates to our casino world. Unfortunately, my experience counts for very little, since this episode is unlike anything we’ve ever seen.
I’ve been reflecting on what may seem like relevant events – the gasoline shortages of the 1970s, for example. But the parallels quickly break down. Then, each evening, we all saw the long lines of cars that Walter Cronkite showed us on CBS, and we heard what economists were calling “supply shock.” There was plenty of demand, but no supply.
The situation today is remarkably different. No doubt, there are serious supply issues. After I asked one of my operator friends why they’d chosen to close weeks ahead of the government mandates, he replied, “it’s pretty hard to run a casino without toilet paper.” I think we can all testify that it’s equally hard to run a home when confronted by stark, empty store shelves that were once overflowing with paper products.
But while there are some similarities to the gas shortage, this is far more than a supply issue. In a recent piece in the Guardian, Harvard economist Kenneth Rogoff lays out what we’re up against. “Unlike the two previous global recessions this century, the new coronavirus, Covid-19, implies a supply shock as well as a demand shock. One has to go back to the oil supply shocks of the mid-1970s to find one as large.”
That, too, is ridiculously obvious. We have both serious supply issues (tried to buy an N-95 mask lately?) and demand disasters (if it hadn’t been cancelled, do you really think there’d be a line at the registration booth in San Diego for NIGA?)
Indeed, if Cosmopolitan or the Stratosphere or Mandalay Bay – or your local casino – were to immediately turn the lights back on and throw open the doors this week, the flow of guests would likely be less than a trickle.
As an industry, we can, and have, developed strategies to attack individual supply issues. In the ‘70s, bus tours were promoted as a fuel saving alternative, locals received more attention than tourists, and we offered substantial fuel pricing discounts (instead of free play or cash back.) Even if you could trade your comp points for toilet paper today, there’d probably be few takers, if any. If you think you’ve had problems with free play awards that don’t result in incremental play, wait until you see what happens when you offer TP. The exits would be jammed, not the slots.
There were a few lessons that we learned in the 2008 recession, when demand also fell. It was the rare casino that didn’t make some significant layoffs. While those job cuts were painful at the time, they were also productive in the long run.
The bountiful years of 2005-2007 had resulted in bloat. Thus, many used the layoffs to right-size and gain efficiency. With high unemployment for the next two years, most of the retained workforce was motivated, thankful for the loyalty and willing to work through the hard times.
It’s quite unlikely that we’ll see a similar situation this time around, unfortunately. Entire job categories have been wiped out. So has the myth of any sort of job security. And earlier issues will most likely become worse: if you think Labor was uneasy with high CEO compensation packages in the past, wait until they reflect on those numbers in the future.
The lessons of the flu pandemic of 1918 are probably lost now, but the coronavirus will definitely cause change. Writing in Politico this week, Georgetown professor Deborah Tanner said, “This loss of innocence, or complacency, is a new way of being-in-the-world that we can expect to change our doing-in-the-world. We know now that touching things, being with other people and breathing the air in an enclosed space can be risky. How quickly that awareness recedes will be different for different people, but it can never vanish completely for anyone who lived through this year.”
That could be the most enduring and frightening legacy of these times. Until just a few weeks ago, the most desirable place to go was, to invoke a cliche, ‘where the action is.’ For a lot of Americans, that meant casinos. They were fun at least partially because they were crowded, teeming with folks eating, drinking and playing together. Our success was built on offering a communal setting for entertainment. We’ll have to work hard to recapture that innocence.
There are some signs of hope emerging from the digital world. Zaheena Rasheed, writing for Al Jazeera this week, proclaimed, “In the post-pandemic world, technology will be as ubiquitous as it is now, if not more, and tech companies will become even more powerful and dominant. That includes smaller firms like Zoom, and the big players such as Google, Apple, Facebook and Paypal. And not just Americans firms, but also Chinese. Prior to this, we saw a period in which people were increasingly more cynical and critical of technology. But, as the pandemic increases our dependence on technology, people will forget that hostility towards Silicon Valley, at least in the short term.”
That could bode well for those who’ve already invested, or will be investing in, interactive on-line gaming. Multiple on-line providers have noticed a significant increase in activity with the advent of these casino shutdowns. Of course, with all college and pro sports out of action, the once-hot sports betting sites are suffering, but post-pandemic, they’ll likely blossom as well.
One lesson I can impart with certainty: we will recover. It might be quick. It might be slow. It took four years for 2007 business levels to recover. While it’s a long way from 1979, gas today is plentiful and heading below $2.00 a gallon. All things do and will pass.
Hopefully, the recovery brings some improvement. Eric Klinenberg, a sociologist at NYU, also wrote – very trenchantly, I thought – in Politico, “The coronavirus pandemic is going to cause immense pain and suffering. But it will force us to reconsider who we are and what we value, and, in the long run, it could help us rediscover the better version of ourselves.”
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