$21.3 Billion Losses In Gaming Industry Amid COVID-19 Pandemic

7.04.2020, 17:27

One week ago, Steve Sisolak, the Governor of Nevada, announced the temporary shutdown of inessential establishments due to the global COVID-19 outbreak. A lot of businesses had to undergo closure, including all casinos in the state. According to the regulation, they should remain closed for 30 days.

Las Vegas without the iconic casino lights is as difficult to imagine as the amount of loss that the temporary measures will bring. However, it is still challenging to make any preliminary estimates of the impact that the lockdown will have on the economic situation in Nevada. The long-term influence directly depends on how long the coronavirus pandemic is going to last and whether the 30-days shutdown policy will be enough.

$21.3 Billion Estimated Loss in the Gambling Industry

Even though the lockdown has begun just recently, it is rather evident that it will have a massive negative effect on Las Vegas. Service industry, including the entertainment and hospitality sectors, nowadays experiences a severe crisis due to the coronavirus. The Economic-Policy Institute estimates a loss of approximately 67,000 jobs in Nevada. The scale of the impact is enormous, as 353,300 citizens of Nevada do service-related jobs for a living.

According to the data of the American Gaming Association (AGA), the temporary shutdown of casinos across the country may result in a year’s wage loss of approximately $59 billion. It would also lead to a reduction of casinos’ $34.3 billion tax revenue. These numbers are a depiction of the gravity of the coronavirus situation for all the states, and the current necessity to find suitable budget-management solutions.

The casinos, being a significant part of the economy of Las Vegas, and its main attractions, now stay without profit. According to the estimate of AGA that came out on the 19th of March, the total amount of losses in the USA would reach $21.3 billion if the closure of casinos lasts for two months.

Experts warn about a possibility of layoffs turning into terminations if the casinos will have to close for good. Even the most prominent brands are in contact with the White House for the chance of receiving a bailout to deal with the unexpected situation.

Even though most established casinos are ready for a 20-30% reduction in revenue, a drastic drop to zero comes as a surprise. The fact that the time span of the coronavirus outbreak in the US remains unpredictable for now makes it hard to understand what awaits Las Vegas. A 30-day lockdown is a painful, yet manageable situation, whereas longer safety measures may result in bankruptcies for many establishments.

Expected Coronavirus Timeframe

Currently, the COVID-19 pandemic is developing rapidly within the USA, with official statistics of 212 cases of contamination and four deaths in Clark County.

As the pandemic progresses, many projection versions are coming up of how long it will eventually last. Even though it is still premature to say when the long-awaited recession is coming, we can see how big sports events react to the current regulations.

For instance, the Kentucky Derby changed its date from the first Saturday of May to the 5th of September. This year’s Olympics will move to the year 2021. The French Open will, hopefully, happen at the end of September, while the NBA is aiming for the middle of May or beginning of June.

These dates are, of course, preliminary, and are not a reliable prediction of the COVID-19’s timespan. However, they certainly are a representation of the expectations of the industry’s big figures.

Online Betting Adjustments

In the best case, Nevada will be able to return to its normal life after four weeks. However, a more extended lockdown period may also be realistic. As several countries are entering eight to ten weeks of closure, this could also be another version of what awaits Las Vegas. Even if the casinos will be back in business after a month, it is highly unlikely for many sports to be available for bettors.

Even though the global coronavirus outbreak came as a surprise, some businesses have managed to adjust to the situation successfully. Online betting websites have shown remarkable flexibility in this regard. Some sites have currently expanded their variety of offers, paying attention to the sports they would normally not consider too much. Users can now place bets on esports, such as NASCAR iRacing, as well as fringe sports like golf (Minor Tour) and marble racing (Marbula One). Some can also find interest in placing bets for Myanmar soccer leagues.

Macau Lockdown Revenue VS Zero Earnings in Las Vegas

As China is nowadays recovering from the severe hit of the coronavirus, we can attempt to assess what the impact of the pandemic in the US may be. Macau, the Eastern Las Vegas, experienced a closure to prevent the spread of COVID-19. All of Macau’s casinos were not functioning for 14 full days in February.

Despite the shutdown, according to the Gaming Inspection and Coordination Bureau, the casinos of Macau managed to win $386.5 million during the lockdown month. Statistically, it means an 87.8% decline in comparison with the last year’s revenues.you

When it comes to Las Vegas, however, the casinos will remain shut down for a full month, which is double the time Macau spent in closure. It means that there will be zero revenue for the land-based gambling businesses in Las Vegas in the nearest future.

Even after the pandemic is over, the money will not start flowing into the gambling industry the same way as it did before. It will take time for both the citizens and businesses to restore their economic state. The recovery from the coronavirus outbreak is a long-term process that goes far beyond the decrease in the contamination rate. Macau authorities, for instance, until now impose a two-week quarantine for people entering the city from Taiwan, Hong Kong, and mainland China. Foreigners and Chinese residents who traveled overseas currently cannot enter Macau due to safety measures.