COVID-19’s (Coronavirus) Impact on the Casino Industry

When the novel coronavirus (COVID-19) hit China in full in November 2019 no one batted an eyelash. With an unknown underlying cause, the pneumonia that slowly but steadily started claiming human lives was chalked up to a localized phenomenon, although the World Health Organization (WHO) was on red alert as soon as it heard that a mutated form of the coronavirus might be spreading.

By February it had become clear that the coronavirus is a threat that must be contained and China answered raised to the occasion quarantining 11 million people in Wuhan. Everything suffered, but the virus has been finally brought under control at least in China.

Sacrifices had to be made by everyone and understandably, the coronavirus affected Macau and the casino industry there. Early in February, Macau – one of the world’s largest gambling hubs – had to bring its casino industry to a halt as it complied with a two week quarantine period in place.

Macau Casinos Continue to Bear the Brunt of the Coronavirus Outbreak

Casinos in Macau kept losing an estimated $2.5 million per establishment per day in Macau throughout February with the total gambling revenue in the month falling by 88%. In comparison, the revenue suffered only 11.3 in January. But while China may have pronounced the coronavirus defeated, a set of strict new measures has been introduced by the central government.

In public, citizens keep their distance. They are subjected to random and regular screenings by health inspectors and police circulating in public. Yet, Macau’s re-started hub is not quite picking up steam yet as foreign travellers are not too eager to return to Macau, although Asia may now be safer when it comes to the coronavirus than Europe and the United States where the death toll has been rising.

Yet, Macau is yet to try and rally after a difficult month that saw almost 90% of its revenue written off due to the lockdown and uneasiness that followed. Macau casinos cannot for sure how bad this year is going to turn out, although analysts already predict a back-to-back bad year for the industry.

The real question remains by how much. Some have said that the revenue is most likely going to pick up responding to pent-up demand – a theory that has yet to be tested.

Macau Rallies, But the United States Suffers

While Macau seems to have normalized, the United States is only now beginning to experience the potential problem of a new deadly strain of virus that has high transmittance rate and a mortality rate that has reached 3% of all infected.

With Germany and the United Kingdom predicting that 80% of the population may become infected, a 3% mortality rate suddenly seems too much. The Wildhorse Resort & Casino in Oregon became the first casino establishment to shut down amid fears of spreading the infection after a worker tested positive for the disease.

So far, 32 people have died out of 1,000 cases which aligns with the forecast 3% mortality rate. Presently, Las Vegas and Atlantic City are on edge but no establishment there seems to have closed operations for the time being.

With 1,000 cases reached, however, casino establishments such as ARIA, Bellagio, MGM Grand, Mandalay Bay, The Mirage, Luxor and Excalibur will temporarily close their buffets from March 15 onward until a resolution to the situation is found.

Yet, Nevada health authorities aren’t yet certain if the disease hasn’t already spread across the city and health workers are worried that they may have already been exposed in ERs. Surprisingly, though Las Vegas Mayor Carolyn Goodman has insisted on buffet staying open, perhaps focusing too much on the potential economic risks.

No Closures, But Casino Begin to Feel the Effects of the Coronavirus

While the US casino industry is going at full bore, companies are already feeling the pressure from the coronavirus threat. No-one is safe and casino patrons seem to be coming to the same realization, avoiding establishments.

Of course, the panic of the virus is also not necessarily justified when you think about it, but it still comes in the way of casinos’ bottom line. Meanwhile, the New York’s Yonkers Raceway has become the second establishment to shut down after a worker contracted COVID-19 and died.

Several companies have taken the financial consequences of the coronavirus outbreak very seriously as well, citing the virus on their earnings call. The brands to have discussed the virus seriously as part of their business strategy include Las Vegas Sands, Melco, MGM Resorts and quite a few others who have been closely following any developments related to the coronavirus.

Italy’s Casinos on Lockdown

Meanwhile, Italy has become the world’s most severely affected country with the death toll soaring to 36% with 631 people dying with estimated 10,000 infected. Responding to the rapid increase in death cases, Italy’s prime minister, Giuseppe Conte, has called for a nationwide quarantine lockdown with all services cut down to a bare minimum.

The measures included establishments such as casinos that may remain open only within certain hours and only on the condition that there is at least one-meter space between patrons and staff.

However, with the severity of the outbreak intensifying, the government may undertake even stricter measures and bring the entire country to a complete shutdown. Economic blues have crept into the daily lives of Italians, but the Conte’s government has announced a moratorium on debt and mortgage to put the economy to a standstill and prevent people from becoming financially ruined as a result of the disease.

Entertainment and Casinos Will Continue to Suffer

Overall, the economic outlook for the casino industry is morose to say at best. It is not very likely that the casino industry will manage to rally in 2020. Even with Macau coming back to normal, visitors are more than reluctant to travel and be in places where a lot of people come from every corner of the world. The WHO expects the coronavirus to continue buffet the world until June 2020 in the very least.