As casino stocks fall and the coffers run dry, Nevada governor Steve Sisolak announced that all casinos in the state will remain closed until April 30. The decision to prolong the coronavirus lockdown stems from the latest advice from the federal government.
Not an Easy Decision
In order to arrest the spread of the coronavirus, Gov. Sisolak ordered all casinos in Nevada to close for 30 days on March 17. The order also affected all ‘non-essential’ businesses to close, especially where large groups of people congregate. Nevada schools have also been closed during the pandemic.
The governor explained the rationale behind the decision. “If your business brings groups of people together, it should not be open. I know the impacts of this decision will reach far and wide into the homes and lives of our Nevada families,” Sisolak said. “This was not an easy decision to make.”
Nearly 25% of Nevada’s total labor force works in leisure and hospitality, so the economic impact will be felt far and wide. At the epicenter of the casino empire, Las Vegas mayor Carolyn Goodman fought against the governor’s decision. But the governor has the final legal word in Nevada, and said he “was not asking.”
The Daily Burn
Financial experts report that the gaming and hospitality sector stocks have not been this low since the global financial crisis 10 years ago. While they predict casino stocks will rebound after the pandemic, many casinos are burning money daily even while closed.
According to a report by Macquarie Securities, the larger casino groups are burning between $1.7m and $14.4m daily across all their holdings. MGM Resorts International has the highest daily burn rate of all of them at $14.4 million. At this rate they will run out of cash in 10 months.
Some of the land owners leasing land to casinos may agree to a rent relief package during the crisis, but the daily burn continues. According to Macquarie analyst Chad Beynon, “The daily burn will remain the same. The only thing that could change by the day is if you’re laying off employees – but you can only cut so much,” Beynon said. “I don’t think the daily burn changes. Only the amount of time they have left changes.”
Meanwhile, casino employees on furlough during the lockdown have even less time before they go bust, as state unemployment payments only extend so far.
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