Las Vegas-style casinos face uncertain future

THE MASSACHUSETTS CASINO industry faces a long and steep climb back as it prepares to reopen over the coming week, with its opulent centerpiece, the $2.6 billion Encore Boston Harbor, facing a particularly uncertain future.

MGM Springfield and Plainridge Park Casino, which rely heavily on less labor-intensive slot machines, are likely to see a rebound in revenue, but their once proud payrolls may not come back anywhere near as quickly, judging from the reopening experience in Connecticut and other states.

Encore may face more serious challenges, with its main revenue generators – table games and a sizeable retail, nightclub, restaurant and entertainment complex – showing far more vulnerability to the disruptions caused by COVID-19.

The business model of Wynn Resorts’ Everett casino, set to reopen Sunday, is much more akin to casinos in Las Vegas, where the reopening has not gone anywhere near as smoothly, with gaming revenue sputtering amid a fresh spike of coronavirus infections.

Table games are both harder to play amid the various coronavirus safety restrictions and more labor-intensive than slot machines, requiring hundreds of dealers or more.

“The biggest problem I see for Massachusetts is going to be at Encore, with no roulette and a reduced number of people at each table,” said Alan Woinski, president of Gaming USA Corp., an industry consulting and newsletter firm. “It is a table-game-centric market. That is why Las Vegas is having an issue.”

In contrast to most casinos outside of Las Vegas, Wynn’s Encore Boston Harbor relied on table games for at least half of its revenue, and at times significantly more than half, during its first eight months in business since opening late June of 2019, Massachusetts Gaming Commission numbers show.

But when Encore Boston Harbor reopens, table games will be severely restricted under new, coronavirus safety rules. No poker, roulette, or craps (a dice game) will be allowed, while blackjack tables will be limited to three players, with everyone separated by Plexiglas partitions.

Wynn Resorts has not yet offered any update on its revenues at its two Las Vegas casinos, which reopened in June, but a regulatory filing by rival Caesars Entertainment offers a glimpse at the challenges faced by more table-game reliant casinos.

Through June 10, revenue at Caesars’ five Nevada casinos plunged 56 percent to 58 percent from the year-earlier periods. Operating income took an even bigger hit, falling 110 percent to 120 percent, the company stated in a filing with the US Securities and Exchange Commission.

By contrast, regional casinos that rely on slot machines have seen a modest rebound in revenue, a development that may bode better for the bottom lines of the MGM Springfield, set to reopen on July 13, and Plainridge, slated to resume business on Wednesday.

Plainridge relies solely on slot machines, while MGM Springfield in January reported that roughly three quarters of the $20.6 million in gaming revenue it generated that month came from slot machines.

Both Mohegan and Foxwoods have reported seeing an influx of customers since they reopened at the beginning of June, despite plastic partitions separating players and dealers on table games, requirements that customers and employees wear masks, and temperature checks.

Mohegan Sun reported a 10 percent jump in slot machine revenue during the first two weeks in June, compared to the same period in 2019, according to an SEC filing.

Foxwoods has seen revenue comparable with the same period last year, and with a significant part of its gambling operations still shut down.

Through June 24, Foxwoods contributed $6.7 million to state coffers in Connecticut through its 25 percent slot machine revenue-sharing agreement. While Foxwoods has not reported overall slot revenue stats, that pencils out to overall slot revenue of $26.8 million for the first three weeks of the month and a projected $33.5 million for the entire month.

That is somewhat below the $35.3 million in overall slot revenue Foxwoods generated in June 2019.

A visit on a recent Tuesday night found the casino doing a brisk business.

An older couple from Rhode Island sipped coffee on a bench by a row of shops, taking a break from playing the slots, while nearby, Richard Lane, a business major at Curry College in Milton, fretted over people gambling away unemployment checks while marveling at his own luck.

“I am up $2,000 and I am not going to stop,” Lane said.

But whether they rely on table games and high rollers, or slot machines and the mass market, casinos across the board are employing far fewer people than they were a few months ago, and with no signs of any imminent rebound in staffing levels.

When Encore opened last June, it had a staff of 4,800 and was still on the hunt for hundreds of additional employees.

Encore Boston Harbor recently put 3,000 employees on indefinite furlough.

MGM Springfield informed state labor officials in May it might have to lay off nearly 1,900 of its 2,500 workers over the summer.

Officials at MGM Springfield declined to comment on staffing plans at the casino.

Plainridge’s employees were furloughed in April, along with 26,000 other employees at racinos and casinos around the country owned by corporate parent Penn National. The relatively small casino on the Rhode Island border in Plainville had just over 500 employees, according to a report filed last year with the Massachusetts Gaming  Commission.

The experience of casinos in Connecticut and other states that have been open for the past five weeks point to no immediate rebound in payrolls, which remain a shadow of what they once were.

Foxwoods has said it has recalled 2,000 employees, roughly a third of its pre-pandemic workforce, according to a spokesperson for the casino.

Mohegan Sun has brought back roughly half of its workforce, or roughly 2,500, said Mario Kontomerkos, president and chief executive officer of Mohegan Sun’s corporate parent, Mohegan Gaming & Entertainment.

Kontomerkos was not able to give a timeline for when, or if, Mohegan Sun would return to its pre-pandemic staffing levels

While encouraged by the results so far of reopening, Kontomerkos said bringing back additional staff is linked with reopening amenities. While restaurants and shops have been reopening, and the casino’s hotel is operating at two-thirds capacity, the timeline for reopening the 10,000-seat Mohegan Sun Arena remains unclear and will likely be part of the last phase, he said.

“We are definitely seeing an increase of visitation,” Kontomerkos said. “We are looking forward to bringing back as many of our employees as we can and to the extent the market dictates.”

Overall, the hospitality and leisure sectors, of which casinos are one part, have been the hardest hit by the coronavirus and the economic downturn, noted Victor Matheson, an economics professor at Holy Cross and an expert on gaming and lotteries.

“It’s leisure and hospitality that has been the one sector that has been decimated more than any other sector, losing half of its employment nationwide,” Matheson said. “That has been one sector that has been crushed.”

And so far, many regional casino operators aren’t facing heavy pressure to ramp back up to their pre-crisis payroll levels, having managed to significantly boost profit margins by relying on fewer staff, something made easier by their reliance on slot machines.

At Mohegan Sun, operating income rose faster, at 15 percent, than overall gaming revenue.

Caesars Entertainment’s regional casinos, scattered across the Gulf Coast, Missouri, and Iowa, reported revenue for the first 10 days of June that was flat to up 2 percent, even as operating income soared 60 percent to 70 percent over the year-earlier period, the company reported.

“This is a permanent change for the industry,” Gaming USA’s Woinski said. “We are going to see lower staffing levels going forward.”