Casino Closures Devastate Gaming Industry, But Could Relief Be On The Way?

Posted on March 30, 2020 - Last Updated on March 31, 2020

As of March 25, all the 465 commercial casinos closed in the US as a result of the coronavirus pandemic. An estimated 649,000 casino employees are currently out of work due to the shutdown.

It marks the first time in history all casinos in the country have closed.

Also, 97% of the country’s 524 tribal casinos have shuttered. The 16 properties still open are mostly convenience locations.

The American Gaming Association, a Washington, D.C.-based trade group that represents the US casino industry, revealed the staggering economic toll. The closures cost:

  • $43.5 billion in economic activity if American casinos remain closed for the next two months.
  • $74 billion in total wages annually for workers.

Pennsylvania’s 12 brick-and-mortar casinos have been shuttered since March 17, and some went dark earlier. In Pennsylvania, the impact hits 16,033 casino employees. Also, $1.066 billion in consumer spending is at stake for the Commonwealth should a two-month shutdown occur. 

Economic impact of casino closures

The effect of closures reverberates beyond the building’s walls. The gaming industry is a key economic driver for 350,000 local small businesses and creates 17,000 gaming supplier jobs. Casinos are vital to local small businesses, delivering $52 billion annually in small business revenue to construction, manufacturing, retail, and wholesale firms.

Casino gaming produces $41 billion in annual tax and tribal revenue sharing nationwide. The money goes to essential support for local hospitals, first responders, and other public services.

American Gaming Association President and CEO Bill Miller released the following statement on the economic toll the COVID-19 outbreak is having on the US casino gaming industry:

“The impact on our employees, their families and communities is staggering, and the implications extend far beyond the casino floor. Leading technology companies that supply the industry, and the nearly 350,000 small business employees that rely on gaming for their livelihood, are also feeling the devastating blow of this unprecedented public health crisis. The federal government must act swiftly and comprehensively to get America’s hospitality employees, and the small businesses that support them, back to work.”

How long might PA casinos remain shuttered?

Six Pennsylvania brick-and-mortar casinos were closed on March 16. Pennsylvania Gov. Tom Wolf ordered a statewide shutdown of all nonessential businesses effective at midnight.

After Wolf’s press conference, the Pennsylvania Gaming Control Board (PGCB) put out the official notice for closure to the remaining six casinos.

“While the closure of the casinos is temporary, there is no specific indication of when reopening will occur.”

On March 29, President Donald Trump extended national social guidelines until April 30. The limit on large gatherings would signal that casinos in Pennsylvania, and the rest of the country, will remain closed until at least the end of April.

On March 30, Gov. Tom Wolf announced schools and nonessential businesses in PA would be closed until further notice.

“We’re going to keep our schools and businesses closed as long as we need to keep them closed to keep Pennsylvania safe,” Wolf said. “I know this isn’t easy to hear … [but] if we want to save lives, we must continue to distance ourselves from each other.”

Casino employees feel the effects

Whether or not casinos choose to pay employees while they are temporarily closed is on a property-by-property and company-by-company basis, says the AGA.

Casey Clark, senior vice president of strategic communications at the American Gaming Association, said:

“This is an unprecedented blow that is going to ripple through the economy in Pennsylvania and every state that has gaming. Our council to casinos has been to prioritize the health and safety of customers and workers and follow the direction of local state and federal health experts. We are all learning as we go.”

On March 27, PA-based Penn National announced companywide furloughs affecting approximately 26,000 employees across the nation beginning April 1. In PA, that means employees of The Meadows and Hollywood Casino at Penn National Race Course.

Information on unemployment or workers’ compensation benefits is available at the Pennsylvania Department of Labor and Industry website.

Online casino play increases in PA

Despite the shutdown to brick-and-mortar casinos, Pennsylvania’s eight online casinos remain operational and open for business. Pennsylvania is only one of four states that offer iGaming.

PGCB spokesperson Richard McGarvey said:

“To this point, the PGCB is not aware of any disruption of online services.”

With all land-based casinos in New Jersey and Pennsylvania closed, online casinos have seen an increase in play.

Mattias Stetz, the COO of Rush Street Interactive, which operates PlaySugarHouse.com and BetRivers.com, said:

“We’ve seen quite a surge in online casino play. We expect that uptick to continue while Americans are being asked to stay at home (and are) looking for ways to be entertained.”

Poker traffic on the rise, too

PlayPennsylvania monitored the traffic at PokerStars PA, the state’s only option for online poker, over the course of a week. Traffic more than doubled with numbers peaking at 3,600 seats filled. The following weekend saw even larger numbers. On March 29, traffic topped with 5,259 seats filled.

Sites like PokerStars PA are also launching tournament series for online poker players. The PA Spring Championship of Online Poker will run April 4-20. It will be their biggest series in the US yet, with $2 million in prizepool guarantees.

Whether or not more states move to legalize iGaming in the wake of unprecedented temporary closures remains to be seen.

Clark said:

“It’s hard to predict how states will react because no one knows the full scope of what this is yet. I’m not sure how it will factor into legislation.”

How will it break down in terms of taxes?

All forms of gaming — brick-and-mortar slots and table games, online casinos, sports betting, video gaming terminals and fantasy contests — generated nearly $125 million in taxes in February. A total of $103 million came from slot machine play.

Since casinos are going to be closed for at least half of March and likely most of April, the numbers will plunge.

Online casinos pulled in $6.7 million in taxes for Pennsylvania in February, a number that is expected to rise for March and April.

Coronavirus relief bill

The US Senate approved a $2 trillion relief package on March 25. It is the largest rescue package in American history. The legislation includes:

  • Direct payments to Americans.
  • Expansion of unemployment insurance.
  • Aid to large and small businesses.
  • “Significant” funding for the health care industry.

About the US Senate’s passage of the CARES Act, Clark said:

“At AGA, our push has been to ensure the relief funding coming from the federal government was inclusive for gaming companies to continue to support their employees through this hard time. We are fortunate there are some good provisions in there which allows it. It’s important to conceptualize how gaming has been treated in federal relief packages. Gaming has been explicitly excluded from economic assistance. We’ve successfully ensured that gaming companies and the people who rely on them are going to receive some of the benefits of the relief package. There are key provisions that will allow employers to access liquidity to maintain some stability until it’s safe to bring employees back to work.”

Continued support for casinos, communities

When asked if some might view it as a bailout for the casino industry, Clark pointed to the 1.8 million Americans who rely on the gaming industry for employment.

“We are strong community partners, support small business and nonprofits, so I think long gone are the days are antiquated views of gaming. In communities we are active, people are aware of the positive impact casinos have. Any suggestion we aren’t a part of the community or those jobs aren’t worth saving are non-starters for me.”

Miller added that the gaming industry’s inclusion in the CARES Act shows the value of its contribution to the economy and community. However, it does not signal the end of the battle.

“Our fight is not over. As the nation’s response to the pandemic evolves, we know gaming businesses, workers and their workers will continue to need support.”

How can the casino industry recover?

The shutdown to casinos, restaurants and most businesses in the hospitality industry have an immediate and long-term impact. Brookings lists Atlantic City and Las Vegas in the top five places that are most vulnerable to coronavirus-induced recession.

A recently released S&P report gave some hope to regional casinos, like the 12 in Pennsylvania.

It said in part:

“We believe regional gaming markets are more likely to recover faster than destination markets, like Las Vegas, because most customers are able to drive to those properties instead of fly, which reduces the cost of these trips and potential lingering travel fears associated with the virus.”

Clark cited post-9/11 as a metric on the recovery of casinos. He said people returned to a “new normal” where people rallied behind the tourism industry.

“My expectations are that Americans will rally again behind their destinations of choice. We have proven to be a resilient industry. I think hospitality, in general, tends to attract increased investments from the community. When you think about gaming, it’s more than just the gaming floor. There is a full integration that happens at resorts such as hotel, meetings and conventions, restaurants and retail. All of those sectors rebounding should enable our sector to get back on its feet quickly. As that happens, on the operations side, you’ll see support happening on the suppliers side as well.”

There is no doubt that the economic effects of the current situation are vast. All will be hoping for a speedy recovery in life following social distancing.

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Katie Kohler

Katie Kohler is a Philadelphia-area based award-winning journalist. She covers the Pennsylvania gambling industry with an emphasis on sports betting, online casino/poker and the lottery.

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