During the recently concluded third-quarter earnings season, gaming operators speculated on a renewed shutdown of casinos across the U.S.
Health experts predicted an increase in COVID-19 infections throughout the country.
“You can’t ignore that risk. Certainly, any huge resurgence could be a risk to the business,” Boyd Gaming CEO Keith Smith said when asked about the possibility on Oct. 27.
Three days later, Penn National CEO Jay Snowden expressed a similar view.
“We’re all just being cautious,” Snowden said. “We’re staying very close to the health experts and health officials, regulators, local lawmakers. It’s about safety. And that’s what we care about more than anything.”
That forecasted surge in the coronavirus pandemic is a reality. In the last week, the U.S. has reported a new weekly record of cases, with 989,825.
Input from the White House Coronavirus Task Force has been muted. A petulant and defeated president is sulking and spewing falsehoods on social media while the coronavirus spreads, refusing to allow any collaboration between the task force and the incoming Biden Administration.
Meanwhile, governors and other state officials are left to come up with their own coronavirus mitigation solutions. None of the plans is based on a possible vaccine, which may not see distribution until after Jan. 1.
The front door of the closed Wynn Las Vegas is padlocked on Tuesday, March 17, 2020. (Jeff Scheid/The Nevada Independent)
As of Tuesday, Massachusetts, New Jersey, Illinois, Michigan, New York, Colorado, Ohio, and the cities of Philadelphia and Kansas City, Missouri, have taken steps to lessen COVID-19 numbers. Overnight curfews, limitations on crowd size and indoor operations, and outright closures have been implemented and cover restaurants, bars, taverns, and entertainment venues.
Casinos are included in the rollbacks. For several regional operators, evening-to-early-morning curfews have ended 24-hour gaming.
The nationwide casino shutdown the gaming industry experienced starting in March – nearly 1,000 commercial and tribal casinos closed in 43 states – does not look as if it will be repeated. At least for now.
Casino companies and gaming equipment providers are prepared financially to weather business disruptions. As the springtime closures took hold, gaming companies used friendly credit markets and lenders to boost liquidity and available cash. They were prepared to survive financially if shutdowns continued.
Boyd Gaming CFO Josh Hirsberg said the company, which operates 29 casinos in 10 states, now has more than $1 billion of undrawn financial capacity, including $500 million in cash and the ability to raise another $600 million to $700 million in new debt.
“We have more than ample capacity to last in excess of two years of complete closure,” Hirsberg said.
Gaming equipment providers are also affected by casino closures, especially slot machine makers who share in the gaming revenues with casinos on certain games and products. AGS CEO David Lopez said the company is also in a better position financially than it was in March.
A sign inside San Manuel Casino in Highland tells guests about their closure March 15, 2020. The facility suspended casino operations and will remain closed until the end of the month due to the coronavirus pandemic. (Photo by Will Lester, Inland Valley Daily Bulletin/SCNG)
Las Vegas-based AGS lost a combined $68.1 million in the first three quarters of 2020, but now has more than $113 million in available liquidity.
“We don’t necessarily anticipate the shutdown of casinos in North America like we did before,” Lopez said earlier this month. “But should there be ‘rolling blackouts’ or a casino here or there, those are easier to manage. Should it be anything larger than that, the experiences from the past put us in a good position to know how to move more swiftly through the process.”
Las Vegas, where gaming numbers are down 45% and visitation is off 55% through September, is self-regulating. Lack of mid-week business has limited Park MGM, Palazzo, and Encore to just weekend operation. Boyd is keeping three properties closed until next year, including downtown’s Main Street Station. Red Rock Resorts is keeping its off-Strip Palms and three other properties padlocked until 2021.
Other markets have a different approach.
In Michigan, Detroit’s three commercial casinos closed at midnight Tuesday for three weeks following the governor’s shutdown order. The state’s 24 tribal casinos – operated by sovereign tribal governments – make their own decisions.
The Gun Lake Tribe, operator of the Gun Lake Casino near Grand Rapids, modified operations, but is not closing. The Nottawaseppi Huron Band of the Potawatomi said FireKeepers Casino in Battle Creek is staying open under the tribe’s coronavirus health, safety, and cleaning protocols.
“We are confident that the recent significant increase in the number of positive COVID-19 cases is not being influenced by FireKeepers’ operations because of the mitigation steps we have taken and which we continue to rigorously enforce,” said Firekeepers CEO Kathy George.
Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at hstutz@cdcgaming.com. Follow @howardstutz on Twitter.
