Cautious Optimism Abounded At G2E That Gaming Industry Is Meeting COVID Challenges

The pandemic's arrival in March stunned the gaming industry, but industry reps are hopeful about the future
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Some panelists at last week’s virtual Global Gaming Expo talked about how shocked they were in March to have been faced with closing casinos — a prospect that once seemed so remote that they didn’t even have locks for the doors.

Other gaming executives recounted the various difficulties in reopening since then: getting guests used to mask policies; trying to order plexiglass that was in short supply; telling some furloughed employees regretfully that they couldn’t return because so many traditional operations were shut down, even if gambling resumed.

And many connected to the industry and speaking online from their remote locations discussed the changes in casinos now from pre-COVID days. Among those, they noted the younger demographic, the focus on real gambling instead of amenities, and the satisfying level of revenue they’re drawing as patrons’ average spending increases.

One way or another — and not surprisingly for an industry crippled from March through June by the pandemic and still recovering — the impact of this year’s coronavirus was a key topic for an annual conference that normally draws to Las Vegas tens of thousands of individuals connected to the gaming industry.

And yet, rather than feeling a need to focus on the negative, so many of the online presenters described their experiences as valuable education and a reminder of how resilient the industry is.

“It always comes back,” said Anthony Pearl, general counsel for The Cosmopolitan of Las Vegas. “You can feel the positivity once guests get back in the building. They want to get back to the new normal, or some version of that.”

The regional operators reign supreme, for now

One common thread in the webcasts held over several days was how regional casino operators have had an easier rebound than those in Las Vegas — as if it weren’t already evident from how all of the attendees were in their own homes instead of gathered on the Strip like normal to bolster its hotel, restaurant, and gaming revenue.

At Cordish Gaming Group’s Live! property in Maryland, said Chief Financial Officer Travis Lamb, “We have had a significant decline in our head count visitation, but we’re able to realize flat or slightly higher gaming revenues.”

That is without the normal number of 55-and-older customers coming in due to health concerns, he said, and without the benefit of using an events center that normally attracts several thousand patrons at least 40 times a year.

Chad Beynon, a senior analyst with Macquarie Group Ltd., observed that regional casinos’ average gaming revenue since reopening is down about 10%, compared to 20-30% for Las Vegas properties.

In some cases, local casinos are even exceeding past performance. One is Hollywood Casino Toledo, which saw all-time high revenue this summer, partly because it was able to attract guests from Michigan who would normally have been patronizing the Detroit casinos that took longer to reopen due to government orders.

In addition, said Hollywood Toledo General Manager Justin Carter, young adults are finding their way into the casino for the first time since other options such as movie theaters and music venues have been curtailed.

“They maybe had a favorite bar or favorite restaurant, and now those have reduced capacity,” he noted. “We’ve typically skewed a lot older, but now we’re starting to see that 21-to-35-year-old start to visit us more and use us as a viable entertainment option.”

Hardcore gamblers aren’t so bad

Casinos for the foreseeable future are lacking the non-gaming aspects that would draw crowds, whether arenas, theater, nightclubs, buffets, or other once-popular amenities.

While industry representatives said they look forward to the return of at least some of that, the adjustment generally hasn’t been bad from a revenue standpoint. They’re finding those walking in the door to be the kinds of loyal, gambling-oriented customers who are a useful staple.

“What we realized was that the patronage had gone down, but the value of that gamer went up,” said Laura Stensgar, CEO of Coeur d’Alene Casino in Idaho, a tribal property that was the first in the country to reopen April 27. “What we have today is the true gamer. We kind of siphoned them out through not having events and big conferences.”

Her property is far from the Las Vegas Strip, but the experience there is similar, according to Kevin Bagger, vice president of the Las Vegas Convention and Visitors Authority Research Center. He said August visitation to the city was down 57% but gaming revenue on the Strip was off just 39% by comparison.

“What that highlights is the visitors we’re getting are generally spending more than they did pre-COVID,” Bagger said. “The visitors that are coming are spending more of their time and money while they’re at the destination.”

That meshes with research presented by panelists from the American Gaming Association and UNLV International Gaming Institute showing that people wary of returning to casinos as yet, due to health concerns, were more likely to be infrequent, casual gamblers than those who have regularly patronized the establishments.

The worries are about fellow patrons, not properties

The gaming executives made much of all their efforts to ensure a healthy, safe environment upon reopening — the social distancing, glass partitions, cleaning staffs, ubiquitous sanitary wipes, and more.

Their efforts seem to be acknowledged by the public, in that researchers conducting surveys in recent months of potential casino customers found any health anxieties had more to do with behavior of fellow patrons than with the properties themselves.

“What people are afraid of is other people,” said Ellen Whittemore, executive vice president of Wynn Resorts. “When you go into a crowd of people you don’t know, you become a little bit afraid.”

Wynn is in the process of addressing that at its Las Vegas complex, she said, by developing a laboratory that will conduct COVID-19 testing of patrons with same-day results. That way, people who may want to attend some group event in the evening such as a theater show — once those return — will know that anyone admitted will have been required, just as they did, to show that they tested negative for the virus.

“You can say, ‘It’s OK to be out on the town, because I know I’m going to be around other people who are safe to be around.’ That’s our short-term solution,” until a vaccine is developed, Whittemore said.

Most people without access to such testing appear to feel safer playing a slot machine than participating in many other activities, inside or outside of casinos, panelists observed.

“People are more comfortable in an area they can control,” Bagger said. “They can control their immediate surroundings at a slot machine, or a table game or even in a restaurant. In larger groups, it gets a lot more difficult to manage that.”

‘Gamblers are risk-takers by nature’

No one taking part in discussions seemed prepared to predict just when things such as large communal gatherings will be allowed again.

That and many other traditional casino experiences have been disrupted by the COVID health concerns, but panelists said that’s not all bad, as they’re maybe learning things they wouldn’t have otherwise. They’re not spending as much on marketing now, some pointed out, and maybe they never really needed to.

Carter, from the Toledo casino, said reconsideration might also be given to “some of the conventional wisdom about how you design a slot floor, how many machines you put in close proximity. I think that’s a thing that has changed. It used to be ‘Cram them in.’ I don’t think that is the future of our industry.”

Lamb, from Cordish, said on a different panel, “We’ve gotten comment from customers that they wish we had plexiglass before COVID actually, that it gives them their little private area to play in.”

A number of presenters also talked about how they believe the COVID concerns will speed an evolution the industry has long sought — away from use of cash in all transactions and adoption of cashless, contact-less technology on the casino floor, once regulators allow.

The consensus then, if there was one from the panels describing COVID’s impact, is industry representatives see many positives from having already met, in large part, the pandemic’s initial challenges.

And while many uncertainties remain — the time frame of capacity restrictions, how long it will take before older customers feel comfortable returning, just when events that draw hundreds or even thousands or patrons at a time can resume — an air of cautious optimism largely came through.

“Gamblers are risk-takers by nature, and they continue to come back,” said Adam Rosenberg, managing director of Fortress Investment Group, which funds gaming firms. “Humans are resilient, and we’re social animals and we enjoy communal experiences, and I don’t think that’s going away.”

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