Casinos Feels the Pain as Coronavirus Lockdowns Continue

The American gaming industry faced unprecedented financial losses when nearly every state and locality implemented social distancing measures last month, effectively closing every casino in the country. Now that economic pain is coming into focus.

New reports on the nation’s Native American and commercial gambling centers paints a bleak picture for the industry, which annually eclipses $75 billion in revenue.

In just two weeks, tribal casinos have lost an estimated $1.5 billion in economic activity and nearly 300,000 jobs. The commercial casino industry reports casino closures jeopardize as many as 1.8 million jobs across 43 states.

Stakeholders are hoping for a bounce back in casino patrons once threats from the virus are better contained, but even a cursory recovery timeline remains undetermined. With only a handful of online casino and poker options available in the U.S., and with digital sportsbooks effectively unable to offer wagers, the nation’s casino industry is dependent on the reopening of brick-and-mortar facilities.

That means casinos will have to turn to other methods for an economic lifeline, especially from the federal government, even as it seems those relief measures may be hard to come by.

Native American Casinos

Casino closures are hitting Native American communities especially hard, according to a report from Meister Economic Consulting. Nearly 250 tribes across 29 states operate a combined total of more than 500 casinos, virtually all of which were shuttered by the virus.

Though the tribes don’t have the same requirements under state-level social distancing directives, and some continued to operate even as commercial properties closed, the foot traffic is all but nonexistent as America reaches the second month of the coronavirus-induced shutdowns. This has hurt not only the tribes, but the countless community and local entities that rely on casino revenues to function.

In just two weeks, this has resulted in $4.4 billion in lost economic activity for the country overall as well as 728,000 lost jobs, according to the Meister report. That leads to nearly $1 billion in lost wages during that time and around $631 million in lost taxes for federal, state and local governments.

For the tribes themselves, this means $1.5 billion in lost gaming and non-gaming revenues from casinos. As estimated 296,000 employees are now without jobs, leading to $332 million in lost wages and $240 million in lost tax revenues.

Even as some casinos continue to pay employees, the report notes many of those measures are temporary. The whole economic picture may not present itself fully for months to come.

Commercial Casinos

The commercial casino industry’s economic outlook isn’t much better.

All of the 500 or so commercial casinos recognized by the American Gaming Association are closed, halting an industry that generated nearly $42 billion in gaming revenue in 2018 alone. That has impacted 1.8 million workers and hundreds of thousands of employees in small businesses and other industries that help service or rely on casinos.

As of March 19, the AGA estimated an eight-week closure would cost $43.5 billion in economic activity. Three weeks later, it appears that eight-week shutdown timeframe will be eclipsed.

Even as revenues dry up, it appears a federal government aid may be hard to come by.

After initially applauding Congress’ $2 trillion relief package, AGA officials worked to combat Small Business Administration regulations on the legislation that forbid funds for entities that make more than 33.3% of their profits from “legal gambling activities.” That could preclude access to the $377 billion allotted under the “Paycheck Protection Program” for casinos and other third-party businesses in the overall gaming industry.

After writing to the SBA and Treasury Department last week, AGA President Bill Miller beseeched President Donald Trump Wednesday to change the restrictions, but it remains to be seen if the nation’s gaming entities will be able to access these stimulus funds.

“These interim rules rely on antiquated, discriminatory policy that renders small gaming entities ineligible to receive critical loan assistance designed to help small businesses pay their employees,” Miller wrote Trump.

Casino Industry Solutions

Even with federal funding from existing or future relief packages, the casino industry is facing millions of dollars in lost economic impact each day.

Online casino gaming and real money internet poker participation is increasing in the U.S., but these offerings are legal in only a handful of states and represent a small fraction of in-person gambling. Legal mobile sports betting is available in 10 states but is effectively useless with nearly every sports league in the world closed by the virus.

Encouragement from leading gaming advocacy groups such as the AGA could help to change the government’s gambling restrictions. So could interventions from gambling magnates such as Sheldon Adelson and Steve Wynn, both of whom have contributed millions of dollars to the Republican party. Trump himself is a former casino owner.

Like the coronavirus itself, much remains uncertain. Legal gambling, and casinos in particular, have a massive influence on the nation’s hospitality industry and the American economy as a whole. The first month of shutdowns has shown early strains on the industry’s financial health. Matters could become more dire without federal action.