The wait continues.
Nevada Gov. Steve Sisolak’s March 17 order that all gaming devices in the state be turned off led to the temporary closures of casinos throughout the state. It also led to taverns, gas stations and supermarkets with slot machines to either turn them off or temporarily close until the governor determines it’s safe to reopen.
Sisolak has made it clear he will not allow casinos and other non-essential businesses until he gets the “all clear” from medical officials.
“We are not basing this on hopes or emotions or politics,” Sisolak said. “It will strictly be based on medical decisions, medical guidance and statistics.”
Sisolak wants to open the state’s economy as quickly as he can, but not at the risk of the public’s health. Nevada casino gross gaming revenue (GGR) over the last 12 months through February 2020 totaled $11.59 billion. The state taxes casino win at 6.75 percent, meaning more than $782 million was paid to the state last year from gaming.
If you included the loss of tax revenue from hotel stays, entertainment and other businesses that are closed, a recent study prepared by Applied Analysis for the Nevada Resort Association estimated the state will lose more than $1 billion in tax revenue should the statewide closure last between 30 and 90 days. As of January 1, there were 441 casinos in the state.
When will the casinos reopen? So far, Sisolak has not extended the temporary closure order past April 16, four days after Easter, in an attempt to slow the spread of the virus. But that could change as President Trump extended the administration’s social-distancing guidelines through the end of April.
Shadaba Asad, the director of infectious disease at University Medical Center and a member of the governor’s medical advisory team, said the decision to reopen businesses in Nevada will be done on a day-to-day, or even week-to-week basis.
Asad joined Sisolak for a video news conference on March 26.
Trump said the peak of the death rate from the coronavirus was expected to hit in two phases. Trump predicted the country would be on its way to recovery by June 1.
From a gaming perspective, it means with the Trump administration’s guidelines still in effect, Nevada casinos will likely be closed for the time being. Gaming regulators in Missouri, Massachusetts, and several other states have already extended their closures by a week to three weeks.
Chad Beynon, an analyst with Macquarie Capital, expected any plans to open casinos by mid-April to be delayed. He said he expects properties to burn through cash reserve in April and May before flat EBITDA for June. As a result, Beynon said he expects second quarter GGR to be down 65 percent, with third-quarter numbers off a modest 5 percent, before the industry returns to positive GGR in the fourth quarter of 2020.
“Similar to prior downturns, we and gaming operators … expect the recovery to be less troublesome than most other sectors,” Beynon wrote in a note to clients. “Additionally, downturns generally lead to gaming expansion for tax revenues.”
Currently, Boyd Gaming, MGM Resorts International, Caesars Entertainment, and other Las Vegas-based gaming companies have shut down their properties, furloughed or laid off thousands of workers. But none of the companies has announced plans on how they’ll reopen their casinos to the public.
Depending on how long it takes to return the state’s gaming industry to full health following the coronavirus outbreak, casinos could reduce their workforces. The Culinary Union Local 226 whose 60,000 members in Nevada are currently out of work, assured its members that their jobs were protected.
“Casinos will reopen and by contract the company must schedule work by seniority,” the union said in a message to its members. “The union is negotiating for all workers, full-time, part-time or on-call, to get paid throughout the entire closure period.”
For years, Nevada has tried to diversify its economy by trying to attract non-gaming businesses to Nevada. That strategy has worked somewhat as Apple, Tesla and Google have set up shop in northern Nevada.
Southern Nevada has seen an influx of warehouse operations in recent years, but statewide gaming and leisure are still the dominant industries. According to the American Gaming Association (AGA), an estimated 206,000 casino employees in Nevada are out of work as a result of the shutdown.
Barry Jonas, an analyst with SunTrust Robinson Humphrey, expected to see even longer closures.
“Even once casinos reopen, we could see meaningful impacts to consumer behavior for some period — particularly in the core destination and corporate-oriented Las Vegas Strip.” Jonas said in a research report.