Las Vegas faces billion-dollar blackout

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Nevada’s Governor Steve Sisolak on Tuesday ordered all nonessential businesses, including casinos, to close for 30 days in an effort to stem the outbreak of the coronavirus that has infected dozens of residents statewide.

“In consultation with (Nevada) Gaming Control Board chair Sandra Douglas Morgan, I announce that all gaming machines, devices, table, games and any equipment related to gaming activity will be shut down effective midnight (Tuesday),” Sisolak said at a news conference in downtown Las Vegas.

Nevada has reported 55 cases of the coronavirus and one death so far. Sisolak said his ultimate goal is to come together as Nevadans to save lives.

“That requires aggressive strategies aimed at mitigating community spread,” the governor said. “At this time, we must act aggressively and decisively to protect ourselves, our families and our community.”

The order from Sisolak Tuesday night follows similar moves made by a dozen other governors to close casinos as states moved quickly to mitigate the risk of exposure to employees and guests from the coronavirus.

“I know there will be some who don’t agree with this decision, some who think this is an overreaction,” Sisolak said. “I fully believe this is an appropriate and informed reaction.”

Sisolak did not specify exactly how the state would enforce the closures.

On Tuesday, the Nevada Gaming Control Board issued a seven-page policy memorandum with instructions and official procedure for licensed gaming operators to temporarily close. Among the procedures are plans for security over “pit and other funds during changeover (or) closure,” and chip and token inventories are to be verified.

The board asked that any licensee that is required to temporarily close give regulators at least 48 hours notice and transmit a temporary closure plan to the board within 24 hours.

Sisolak’s announcement on Tuesday gave licensees less than six hours to give the control board notice of the closure of their gaming floors.

Earlier this week, MGM Resorts International and Wynn Resorts announced they planned to close their casinos. On Tuesday, Las Vegas Sands and The Cosmopolitan of Las Vegas announced they were temporarily closing their casinos and resorts.

Prior to the governor’s news conference Tuesday, Station Casinos confirmed it would close all of its 20 Las Vegas properties. The company noted it will offer regular pay and health benefits to all hourly and full-time salaried employees through April 30.

Caesars Entertainment announced late Tuesday that it will temporarily shut down its owned properties in North America, including Nevada, consistent with directive from various government bodies.

“It has become clear that we must take this extreme action to help contain the virus and protect the safety and well-being of out team members and guests,” Caesars CEO Tony Rodio said in a statement.

The company noted it was in a strong liquidity position with more than $2.8 billion of cash on hand.

“While the company believes its current cash position is more than sufficient to fund its obligations, it is also taking appropriate measures to reduce operating and capital expenses, as necessary,” Rodio said.

Nevada casinos operated by Golden Entertainment, Boyd Gaming, Eldorado Resorts, Maverick Gaming, Penn National Gaming will close their gaming floors at midnight to be in compliance with the governor’s order.

“Over the past several weeks, we have increasingly seen governments and companies around the world implement restrictions and safeguards in order to combat the spread of the coronavirus,” said Chad Beynon, an analyst with Macquarie Research.

These include travel restrictions, bans on public gathering, convention cancellations, the Vegas Golden Knights season suspension and the NFL cancelling fan events for its 2020 Draft set for Las Vegas next month underscore the difficulty in assessing the length or severity of the impact.

Beynon said as more consumer-exposed business, including casino companies, face mounting headwinds with uncertain timelines for recovery, “we believe this is a suitable moment to think about the potential impact to leverage, which in our view is generally high across the space.”

For companies that already had strong balance sheet pre-coronavirus, Beynon said he believes leverage remains at manageable levels even assuming a two-month EBITDA cut.”

“We believe the gaming REITs also fall into this category, given that their rent streams are contractual, though acknowledge that rent resets and escalators could be impacted in the medium term.”

Congresswoman Dina Titus, D-NV, whose district includes the Las Vegas Strip, said the country must “ensure those hit hardest get the most help.”

“The Strip will not be the same for now, but it will come back stronger,” said Titus, co-chair of the Congressional Gaming Caucus. “This will get worse before it gets better, but it will get better.”

Bill Miller, CEO of the American Gaming Association (AGA), has called on state governments to support casino employees and companies during the public health emergency.

“In a matter of days, the U.S. casino industry went from a growing, thriving segment of the U.S. economy to a near standstill,” Miller said. “We are witnessing a rapidly increasing number of our nation’s commercial and tribal casinos that have been shuttered, impacting 40 percent of all casino employees.”

Miller added the coronavirus pandemic will have a dire effect on the communities in which we operate across 43 states.

“As state governments close casinos as a part of the urgent public health response to (the coronavirus), elected leaders should move just as urgently to support the workers and businesses who will bear the brunt of those effects,” he said. “Our immediate priorities are actions that provide liquidity to allow us to support employees.

“Gaming is a resilient industry. Once we’re through this crisis, we are committed to working with government leaders to play a critical role in reinvigorating communities across the country.”

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