Tottenham Report: A New Beginning By Andrew Tottenham, Managing Director, Tottenham & Co May 19, 2021 at 10:00 pm This is the week that many casinos and other gambling venues in Europe are emerging from lockdown and permitted to reopen their doors, albeit with restrictions on the number of people allowed on the premises at any one time. The pandemic has had a devastating impact on Europe’s land-based gambling industry. With venues ordered to close, then to reopen, then half-closed, closed, half-open, and closed again, it has been very difficult for management to make any short- or medium-term plans. Some countries have softened the financial blow by subsidising employees’ salaries, but rent and interest payments continue to rack up. Those companies with strong balance sheets and those that took early action to reduce costs will probably survive. Having ridden the storm in the early days of the pandemic, countries such as Austria, Slovakia and the Czech Republic appeared to have managed to minimise the spread of the disease extremely well. Unfortunately, politics got in the way of controlling a second wave and the disease was allowed to spread with alarming consequences. Politicians have looked at COVID-19 as a binary issue: Control the virus and tank the economy or save the economy and allow the virus to spread. What they did not realise was that you cannot have a strong economy if the virus is allowed to rage. What we know now that we did not know a year ago is that the disease is spread through aerosols (very, very small droplets) emitted by an infected person through breathing or coughing, and especially when shouting or singing. Aerosols can remain in the air for quite a few hours. It took the World Health Organisation (WHO) over a year to come to this conclusion, although many epidemiologists had reached the same conclusion many months earlier. Why was the WHO so slow to change its mind? Thomas Kuhn, in his book The Structure of Scientific Revolutions, pointed out that the evidence required to dislodge an accepted theory is much greater than was required for the original theory to become accepted. When the common wisdom was that COVID-19 spread by touch, operators leapt into action, putting together teams of cleaners with anti-viral wipes and sprays. Screens were put up between each seat and between players and the dealer; slot machine systems were reprogrammed to automatically flag up when they were no longer being used so that they could be cleaned. Gambling chips were washed frequently and on games where cards are touched by the players, playing cards were changed after every shoe. All this was done to gain the confidence of the brave souls who did want to go out and gamble. We now know that the chance of becoming infected through touching a surface or object is vanishingly small. These cleaning measures had very little impact on stopping the spread of the disease, but they certainly did reassure some customers. Hospitality businesses have been lobbying their governments to allow them to reopen by demonstrating how they are able to keep their venues and equipment clean and virus free and their customers safe with the use of plexiglass screens, wipes and sprays. Whilst the screens may have been partially effective, socially distancing with capacity restrictions and masks had the greater impact. Attention now should be focused on how air is circulated throughout the venues and what measures are taken to filter out these aerosols. Larger, well-ventilated venues with high ceilings are likely to be safer and have a greater density of customers than those that are smaller, with low ceilings and poor ventilation. Facilities with external gambling spaces will be favoured. For example, the Hippodrome Casino in London had the foresight to extend its open-air gambling terraces. It is a good thing we are coming up to summer. I live in London and I can tell you that, recently, sitting outside to eat a meal is a miserable affair! I believe the big test is still to come. Landlords and banks have delayed taking any action over unpaid rent and interest. It is not only death and taxes that are inevitable. Most companies that have survived, and here I exclude the online gambling companies, will have done so with dramatically weakened balance sheets. What to do about accumulated rents and interest charges will have to be negotiated. For some companies, banks will require (they may have no option) additional collateral. And all of this will be played out against a backdrop of a (we hope) receding pandemic. How customers react will be essential for the survival of many companies. What we can see from the experience in the U.S. is that in states that reopened earlier, casino customer visitation did not take long before it was to near pre-pandemic levels, but the revenue per guest was not as high as previously. Hopefully, the longer lockdown in European countries will not cause a psychological reluctance to get out and enjoy socialising again and visitation will get back to near normal soon.