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Gambling Could Make Comeback Post COVID

Associated Press

Could it be back to the future for the casino industry? 

Gaming operators are going back to basics during the pandemic, with more of a focus on the gambling side of the business, according to a Wall Street stock analyst.

Writing in a note to clients last month, analyst Barry Jonas said the gaming sector is once again the gambling sector. 

“Effectively what we call the gaming industry, in our minds, has morphed to the gambling industry and it’s that drive-to element that is really sustaining it right now,” Jonas told KNPR's State of Nevada. 

Jonas explained that with fewer options for entertainment people have returned to casinos but they want to stay close to home and not necessarily get on an airplane.

“Folks wanted to get out of their homes," he said, "They were going a bit stir crazy. That said, they didn’t necessarily want to get in an airplane. They wanted to stay close to home, maybe willing to drive an hour or two hours for an entertainment option, or gambling option with the caveat that they could go right back home if things didn’t feel good.”

Jonas said that improved demand has helped casinos outside of Las Vegas do well but Las Vegas is known for more than just gambling, which presents a unique challenge.

“What happened was, Vegas to its credit, pivoted away from just being focused on gambling to focusing on non-gaming amenities really impressive buildings, hotels, retail. Unfortunately, the environment we’re in now is Vegas can’t really benefit from a lot of those amenities,” he said.

With live shows closed, limits on dining, no nightclubs and shuttered bars, the reasons to bypass a closer gambling option and go to Las Vegas are gone.

Jonas said it may be time for Las Vegas to pivot again to deal with the current situation, but he notes adapting has always been one of the city's strengths.

One of the biggest problems is business travel. Conventions, trade shows and meetings are all but extinct currently and Jonas is not sure when that important part of the city's economy will return in earnest.

“Once it’s safe, there may be a huge demand to return to Vegas, but at the same time, I’m not sure business travel, out of the gate, will return to the level it was beforehand,” he said.

Jonas believes more companies will limit travel and rethink in-person client meetings. He said companies will be focused on reining in costs.

“I think the recovery will be more weighted on someone who just wants to get out of the house with their friends or their family and the business side is stuff I’m less certain on,” he said.

Jonas did say Caesars Entertainment is reporting more bookings but bookings don't always mean conventions will return. Those conventions and trade shows often account for some of the mid-week traffic that casinos depend on.

“The weekends, from what we understand, occupancy levels have been decent, but it’s that mid-week business, which has been tough, and just given the size and scale of some of these properties, the amount of hotel rooms, the amount of operating costs, it’s hard for properties to succeed with mid-week being so weak,” he said.

For Las Vegas, Jonas said an option would be to offer more deals and loosen slots to bring in more players but other properties around the country don't need to do that because demand has been high.

“The thought being in this demand environment where I can’t go to a movie. I can’t go to a concert and even many restaurants, I can’t have the full experience, gaming is the only place in town that I can go to," he said, "So there is less of a need to give expensive inducements.”

As for casino workers, Jonas believes there will be continued uncertainty and not a lot of improvement. And even after there is a vaccine, he thinks there will be a lag because of the structural changes in business travel.

“The next few years employment levels will be going down across the board," he said, "That would be everywhere from frontline to a more senior corporate type role. I think that’s just the challenge with a lower revenue environment and the need to get a higher margin off the revenues that do persist.”

Barry Jonas, gaming industry analyst, Truist Securities

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With deep experience in journalism, politics, and the nonprofit sector, news producer Doug Puppel has built strong connections statewide that benefit the Nevada Public Radio audience.