Nevada’s governor doesn’t want to close casinos or limit visitation to the Las Vegas Strip, even as the state’s current COVID-19 infections show a “wildfire of community spread (that) continues to grow out of control.”
More than a week after implementing a “three-week pause” that tightened capacity restrictions on casinos, restaurants, and private gatherings to 25%, Gov. Steve Sisolak said the downward trajectory he was hoping to see is not appearing.
“We are in a very dangerous place due to the current, extremely high COVID baseline and limited hospital capacity,” he said during an afternoon press conference. “As I mentioned last week, if we do not begin to see a change in our trajectory and if this crisis continues to get worse, we will be left in the unfortunate position of having to take stronger actions – something I have been desperately trying to avoid.”
Nevada Gov. Steve Sisolak
But in response to a question by The Nevada Independent’s Megan Messerly, Sisolak said travel bans to Nevada from other states or any travel-related restrictions into Nevada were not on the horizon, including quarantines for visitors before arrival or testing requirements.
“It’s a difficult situation,” Sisolak said. “You’re walking on the edge of a knife trying to balance the economy and at the same time a health-care system that has been burdened heavily.”
The Strip numbers are no secret: Through October, Strip gaming revenues are down 43.6% and visitation is off 54.2%. On Thursday, members of the Nevada Economic Forum predicted the state will bring in $1.39 billion in revenue from gaming taxes in the upcoming biennium, down from the previous projections of $1.6 billion.
So, despite the Centers for Disease Control warning against Americans traveling during the holiday, the Strip has put out the welcome mat. There are plenty of available rooms given that the 10-day National Finals Rodeo is taking place in Dallas and away from Las Vegas for the first time since 1985.
Nevada’s health and safety rules prohibit large gatherings for sporting events. That means rodeo fans are filing into Globe Life Field in Arlington, rather than having cowboys competing in front of empty seats at UNLV’s Thomas and Mack Center.
Fireworks rise above the Las Vegas Strip on New Year’s Eve 2019.
During an appearance on KNPR’s “State of Nevada” program, Global Market Advisors Director of Government Affairs Brendan Bussmann said the loss of NFR is damaging to Las Vegas. Meanwhile, the pandemic has caused the cancellation of the customary citywide New Year’s Eve celebration, including the annual midnight countdown that culminates with a fireworks display launched from the roofs of Strip resorts.
Bussmann said it is important that those who do visit understand what they’re facing, such as mask requirements, social distancing, and health and safety protocols – not the traditional Las Vegas free-for-all.
“They’re setting those expectations early for guests so they know what to expect,” Bussmann said. “We may see some changes in protocol between now and then based off of the pause the governor implemented about 10 days ago.”
Macquarie Securities gaming analyst Chad Beynon isn’t holding out much hope for the Strip’s recovery anytime soon. He told investors last week the new capacity restrictions and the typical slow visitation during the weeks leading up to Christmas will result in a fourth-quarter gaming revenue decline of 40%. Overall revenues will drop by 50% to 60% due to a lack of non-gaming attractions.
Deutsche Bank gaming analyst Carlo Santarelli told investors none of the “historical downturns” Las Vegas has faced can compare to the declines caused by COVID-19.
Prior to 2020, the largest single-year decline in Strip gaming revenues going all the way back to 1985 came in 2008 – a drop of 10.5% from 2007.
Santarelli doesn’t expect Las Vegas to show any recovery signs until the second half of 2021.
“While the market revenue mix has changed considerably since the financial-crisis era, we expect gaming to recover relatively quickly in the post-vaccine period, driven primarily by pent-up demand and gaming-customer database mining,” Santarelli said in a research note.
In the interim, he said signs Las Vegas is recovering include a broader macro-economic climate post-pandemic, the availability of overseas travel options, and loosening of corporate travel budgets.
Still, progress on the development of an efficient vaccine to thwart the coronavirus spread is key to speeding the Las Vegas recovery beyond a bleak timeline that has some predicting it will be 2024 before the market returns to pre-COVID-19 numbers.
Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at hstutz@cdcgaming.com. Follow @howardstutz on Twitter.
