Penn National Gaming Furloughs 26,000 Employees and Nevada Stays Closed
The largest news this week has been the decision by Penn National Gaming (PNG) to sell its Tropicana Las Vegas Casino property, joining a restructuring effort across the gambling industry to reduce the impact from the novel coronavirus (COVID-19).
This move is straight out of MGM Resorts’ own playbook, after the company announced previously that it would assume a more asset-light strategy to help it sell off real estate property and focus purely on branding and operating casinos and sportsbooks.
Something that PNG is now endorsing in full. Penn National won’t cease too much control, though, and still keep its real estate in check by selling it off to Gaming & Leisure Properties (GLPI), a spinoff the company completed back in 2013. The deal also features a Hollywood Casino in Perryville, Maryland which will be discussed later.
GLPI will lease the property back to PNG for $337.5 million in rent credits. On top of this news, there is also the fact that Penn National had to furlough as many as 26,000 employees across the United States on Wednesday, April 1, due to the rapid COVID-19 slowdown in the sector.
Estimated 850 “mission critical” employees have been left onboard. The rest, however, will have to take the unpaid leave and hope that the coronavirus outbreak will be resolved soon so that the industry can return back to normal. This is not very likely, however, especially now that Nevada’s own casinos will remain closed.
Nevada’s Closure to Extend and Cover Casinos Through April 30
When Nevada closed down its casinos to fight the COVID-19 pandemic on March 17, the industry thought it would be a quick recovery from there on in. However, Nevada Gov. Steve Sisolak believes that if anything, measures need to be ramped up to adequately address the coronavirus threat.
All nonessential activities have been suspended and that includes casinos and gambling establishments. Gov. Sisolak has now extended the lockdown by another 30 days through April 30.
He has also been trying to secure federal help from President Donald Trump. On Tuesday, the governor sent a formal request for assistance. Nevada, as of the moment of reporting, has 1,300 confirmed cases of COVID-19 and 31 deaths.
While health concerns expressed by Gov. Sisolak are justifiable and he has acted according to what leading epidemiologists recommend, he is also aware of the financial and economic risks.
Some of these risks already started showing up with prices of Las Vegas casino operators taking a strong hit. Eldorado Resorts lost 20% on Tuesday and it was far from the only one. Caesars Entertainment registered another 18.8% down.
Penn National Gaming took a 20% hit and Churchill Downs Inc took a 16% tumble on its share value. Similar percentages were shared by other companies, although much better. For instance, Wynn Resorts only slipped 10.3% of its value.
Boyd Gaming tumbled another 9.7% and MGM Resorts skipped 0.25%, thanks to the company’s policy that has allowed it to optimize and shake off financial risk through smart real-estate management and a diverse portfolio.
Caesars Takes a Massive £13M Penalty Hit in the UK
While things at home have been on lockdown due to COVID-19, across the pond, Caesars Entertainment has incurred a hefty and serious penalty. This is one of the highest fines the UK Gambling Commission has issued this year.
Caesars will now have to pay $16.1 million (£13 million) for what the regulator described as systematic failings in the VIP program of the operator.
As a result of the investigation and fine, three VIP managers have also had to surrender their licenses, highlighting the Gambling Commission’s shift from holding just companies accountable to also looking into the rank-and-file officers directly responsible for regulatory failures.
The Gambling Commission focused on 11 land-based casinos in the period January 2016 and December 2018, establishing numerous shortcomings. Neil McArthur, executive director at the regulator, stressed the important of companies knowing their customers before accepting any money from any customers.
Furthermore, the regulator spoke about other failures regarding the enforcement of anti-money laundering (AML) practices specifically.
Sports Bettors Will Have to Miss Wimbledon This Year
The gambling sector in the United States cannot expect to recuperate any time soon as another major event, the Wimbledon Championships won’t be taking place this year, making for difficult decisions ahead.
The news is big in its magnitude as it was one of the few events that sports bettors have been looking for after most sports out there have been cancelled. March Madness was completely suspended and regular soccer events cancelled.
Even the newly-minted XFL is out, adding to its difficulties. Wimbledon hasn’t been cancelled since 1945, but the coronavirus pandemic has forced the All England Lawn Tennis Club (AELTC) to reconsider.
Yet, this has not been the only event to suffer a major blow. Euro 2020 has been cancelled completely, and many soccer leagues suspended. The Tokyo Summer Olympics have had to be re-scheduled as well, even though the hosting committee has been doing its best to avoid the situation.
Nevada OK’s Esports Betting
In the commotion caused by the coronavirus, one event has gone almost unnoticed. Nevada has allowed gamblers to place esports bets on Counter-Strike: Global Offensive, a popular video game with a vibrant competitive community.
As a result, anyone interested will now be able to bet on their favorite team in the state and try to make a profit out of their knowledge of the game’s dynamics. Esports have proven a buoy for many mainstream organizations.
NASCAR, F1 and even rugby has switched to esports alternatives. FIFA 20, a video game, has long offered an alternative to mainstream soccer and the NBA 2K has been running its own digital league since 2018.
Having esports as a backup plan has helped many organizations soften the blow the coronavirus outbreak has caused to so many gambling establishments from the entire spectrum of the industry.