The number of people visiting Atlantic City casinos illustrates why the coronavirus threat – not government declarations – will determine how quickly the gaming industry and America’s economy recover, an economics professor says.
Cell phone data shows that visits to the recently reopened New Jersey casinos are down by more than half from 2019, said Professor Bruce Mizrach of Rutgers University in New Jersey. The drop in casino foot traffic is more severe than at other business segments, including transit stations, lodging, and fast-casual dining such as Olive Garden, Applebee’s, and Outback Steakhouse.
“It’s definitely COVID-related,” said Mizrach, also an economics consultant who founded and edits a peer-reviewed journal, Studies in Nonlinear Dynamics and Econometrics.
“If (health experts) could announce that they’ve come up with a vaccine and everyone could immediately have immunity to coronavirus, we might see a very, very quick rebound. But forecasting the economy, we think, is similar to forecasting the disease.”
Mizrach and Max Miller, a research assistant for the Rutgers economics department, co-authored an analysis of New Jersey casino visits based on data compiled by SafeGraph, which uses cell-phone signals from 45 million users to calculate foot traffic to six million points of interest in North America. Their report covered June 29 through July 20, the first three weeks after eight of the nine Atlantic City casinos reopened from government-mandated closures. The authors updated the numbers for CDC Gaming Reports with data through July 26, the day last of Atlantic City’s casinos, Borgata, reopened.
The state’s reopening rules include a limit of 25 percent of capacity and a total ban on indoor smoking.
The report says all the casinos saw significant declines in foot traffic from comparable weeks last year, from 20 percent for Ocean to 71 percent for Harrah’s. Ocean’s outdoor dining options might have contributed to its showing, the report says.
Total casinos visits rose gradually each week, starting with 11,331 for the week ending July 5 and reaching 21,957 for the week ending July 26. The most recent total is 55 percent less than the comparable week last year.
“There’s still a long way to go until (casinos) are fully recovered in terms of foot traffic,” Miller said.
A June 29 report by Mizrach and Miller examined visits to New Jersey retail stores and services as the state began its Phase Two reopening. That showed significant decreases in foot traffic at fast-casual dining, lodging, and apparel businesses.
Because the casino-traffic study is based on where consumers go, it does not address online gaming, which has been a bright spot for New Jersey. State figures show casinos had igaming revenue of $84.9 million in June, more than double the amount in June 2019. Online gaming revenue totaled $422.7 million for the first six months of this year, almost twice the $217.5 million through June 2019.
“Probably the lifeline for the casinos has been their online gaming, because people have been able to do that,” Mizrach said. “We know that people that are not working are day-trading. There’s a lot of action on that. And I suspect that the same is probably also true for online gaming.”
He said he and Miller have examined general mobility and economic activity in several states, including a comparison of New Jersey and Texas, where coronavirus cases have spiked recently and foot traffic in malls has dropped.
“It just suggests that reopening policies, particularly when they’re premature, don’t wind up having the intended effect. The disease is really what’s driving economic activity,” Mizrach said. “I think our analysis, and some related work using a variety of real-time data like this, suggests that what your state government decides to do ultimately does not dictate what consumers decide to do.”
That’s especially a factor for consumer decisions on discretionary spending.
“They often choose to avoid leisure activities like dining and restaurants, going to malls and going to casinos if they’re fearful of the disease,” Mizrach said.
“The strong conclusion is that there’s no trade-off between tracking COVID or treating COVID and fixing the economy. In fact, we know the best way to fix the economy is to slow the progress of the disease.”
