The Rodent’s Year: 2020 was the Year of the Rat

December 28, 2020 1:00 AM
  • Ken Adams, CDC Gaming Reports
December 28, 2020 1:00 AM
  • Ken Adams, CDC Gaming Reports

Per the Chinese calendar, 2020 was the Year of the Rat. It has been a rat’s year indeed, an infected, infectious, pustulant, disgusting rat. It crawled out of a hole somewhere in a live market, climbed onto ships much like the rats of bubonic plague infamy, and sailed around the world, visiting every port and infecting every person it touched. It is not the first time in the history of civilization a disease has plagued the world, of course; it has happened many times. Seemingly every century had at least one. The 20th century had the Spanish Flu and polio. The 21st century now has its own, COVID-19, a coronavirus, a mutation of the H1N1 virus that caused the 1918 pandemic.

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The empty Atlantic City boardwalk after the casinos closed due to the coronavirus pandemic

The COVID-19 coronavirus will define 2020 much as the death of Archduke Ferdinand defined 1914, as the Great Depression did 1929, Pearl Harbor 1941, and the attack on the World Trade Center 2001. In the annual contest by writers and commentators of all strips to define and describe the year and attempt to predict the future, the pandemic will occupy center stage. It has affected everything: every community, group, political party, industry, business, occupation, form of entertainment, and family in the world. It has made 2020 a unique year. In 2020, the entire world was held captive by a single virus. Most countries were forced to shut down their economies in an attempt to contain it.

This country was no exception. In March, governors around the U.S. began ordering non-essential businesses to close and asking people to stay home and practice other safety measures. Casino gaming and most other forms of gaming fell into that category. By March 16, every casino in the country had closed its doors. With the exception of a couple Indian casinos and some small casinos in South Dakota, casinos were closed for the entire month of April. Gaming revenue for April was $145 million, $128.4 million of which was generated by online gaming in New Jersey and Pennsylvania. In May, total national gaming revenue was $362 million. Four states had permitted casinos to reopen; still, $169 million of the total came from online gambling. June’s revenue was $1.8 billion, with casinos open in 15 states. The reopening continued through the summer, but by fall, reflecting a resurgent virus, some states had started to close their casinos for a second time.

Initially, casinos experienced revenue surges as customers rushed back. It appeared to be the anticipated pent-up demand. Casinos were open but operating under heavy restrictions. The most extreme example was Michigan; casinos in Detroit were only allowed to operate at 15 percent capacity, and those capacity numbers were calculated using fire department standards for the maximum number of people allowed in the building. There were other restrictions, as well: some states did not allow indoor food or beverage service and, because of capacity restrictions, entertainment and conventions were severely limited. For Las Vegas, that has proven to be the most significant restriction; entertainment and conventions are major drivers of the city’s tourism. Limiting the number of people allowed in a public gathering virtually stopped all conventions and entertainment on the Strip.

Even states that did not close casinos a second time tightened restrictions. Most recently, Nevada and Massachusetts reduced the permitted number of patrons from 50 percent of standard capacity to 25 percent. New York and New Jersey still do not allow indoor dining. Each state has its own set of restrictions and its own timeline for lifting those restrictions or reevaluating the situation. In the first couple of weeks of the new year, most of the existing restrictions are going to be reviewed. Some may be eased or lifted completely, depending on the status of active and new local cases of COVID-19. But that will be a story for another year, 2021. The impact of the coronavirus on the world’s economy and gaming will remain the story of 2020. Still, though, there were other significant events and trends in 2020 worthy of note.

Eldorado Resorts acquired Caesars Entertainment and then changed its name to Caesars. It is now the largest casino company in the country. REITs continued to be a significant factor in the gaming industry in 2020. Most major acquisitions included a REIT component, including the Eldorado-Caesars deal and the myriad secondary transactions that resulted from the merger. Those other transactions were also a trend in 2020. The most notable acquiring company was Twin River, which had begun life in Rhode Island with two casinos. As competition began to squeeze those operations, Twin Rivers looked elsewhere, and even before 2020 had become a significant player. Twin River spent 2020 swimming in the wake of the massive Caesars deal, gobbling up the leftovers. One of those was Bally’s in Atlantic City. Twin River liked the name so much, it adopted it across the board. Goodbye, Twin River.

Sports betting continued its dramatic march across the land, growing from 14 states with legal sports gambling in 2019 to 24 states in 2020. The monthly handle is approaching $3 billion a month. In October, with 15 states reporting, the handle was $2.7 billion, and the revenue was $233.6 million. By way of comparison, only Illinois, New Jersey, Nevada, and Pennsylvania generated more revenue, and in each of those states, sports betting is a major component of the state’s gaming revenue. Sports betting, it is now abundantly clear, cannot be separated from online gaming; in the states that permit online sports betting, approximately 90 percent of the wagering is made remotely. Pennsylvania and New Jersey also have conventional casino games online. Online gambling is poised to be a force in coming years; in 2020 it stood as a subtext to sports betting, but growing in importance each month.

In any other year, the evolution of Eldorado and Twin River/Bally’s into major players in the gaming industry would have been the story of the year. Or at least second; the expansion of sports betting and the growing importance of online sports betting might have been first. But not in 2020.

2020 will go down in history as a year in which, for much of it, there were effectively no legal casinos operating in the United States. It was the first time since 1931, when Nevada legalized casino gambling. The situation was relatively shortlived, and many casinos have since reopened, except in the four states that closed their casinos a second time. But even when open, casinos are operating with limited capacity, fewer amenities, and almost no entertainment options beyond gaming; the customers stand six feet apart and wear masks, and every few minutes an attendant comes by and wipes things down. New Year’s Eve, often the best day of the year for a casino, will be subdued this year: no fireworks, big parties, or hugging and kissing. It was a ratty, diseased, and distressing year. Let’s hope 2021 is better. It has to be, doesn’t it?