Author: Casino Connection Staff

Twin River Worldwide Holdings (TRWH) is reassuring its employees that they will have jobs once the coronavirus crisis has passed. TRWH operates Rhode Island’s two casinos, plus one in Mississippi, one in Delaware, and three casinos and a horse racetrack in Colorado.

TRWH, based in Rhode Island, last week sent out a letter assuring investors that it has “sufficient liquidity” to meet all obligations. It will continue health coverage for its employees who work at the closed casinos during the shutdown and all salaried and hourly workers currently not working will have their jobs when they reopen.

In the letter the company wrote, “Twin River is also establishing a fund to provide financial assistance to employees who experience severe hardship during the shutdown period and is working diligently to bring employees back to work as soon as possible when permitted.”

The company first ordered its holdings closed for a week last week, and then the Rhode Island Department of Revenue, Lottery Division extended the closure to March 27. Marc Crisafulli, president of Twin River Casino Hotel and Tiverton Casino Hotel, commented, “We believe our temporary closure for an additional week is necessary to help ensure the health and safety of our employees, customers, and all residents of Rhode Island.”

When casino employees will return is not yet clear, according to company spokeswoman Patti Doyle. “It’s just a fluid, emerging situation. We should know a bit more in a couple of days,″ said Doyle, who was also unclear on how many employees have been laid off. Whenever the operations do reopen it will be to thoroughly sanitized casinos, especially the most-used “touchpoints” and including items such as chips.

The letter notes that the company recently funded $250 million in revolving credit and has $360 million on its balance sheet and is “carefully managing expenses to ensure that it has sufficient liquidity to last through these uncertain times″ and “is confident that it will have sufficient liquidity in excess of 12 months to meet all of its obligations including debt service, required capital expenditures and acquisitions.″

Gaming is the third largest source of revenue for the Ocean state’s government. Before the coronavirus interrupted operations, it anticipated collecting nearly $300 million from slots, $15 million from table games and $9.4 million from sportsbook.

The town of Tiverton also depends on casino money. At a city council meeting held remotely last week, Town Council President Patricia Hilton was unable to answer the question of whether the state would be paying the up to $3 million that the Tiverton Casino Hotel is committed to paying the town each year.

Since the casino is closed, that funding source is jeopardized, she admitted. “I don’t know, because it’s closed,” Hilton said. Councilwoman Donna Cook added, “This is unchartered territory.”

Las Vegas’ casinos may be closed for business but work on most of the city’s largest construction projects continues, including the $2 billion Allegiant Stadium, the expansion of the Las Vegas Convention Center, the Strip’s $4.3 billion Resorts World Las Vegas and Downtown’s Circa gaming resort.

The 65,000-seat Allegiant Stadium, future home of the NFL’s Las Vegas Raiders, is expected to be completed in time for a concert by country music superstar Garth Brooks on August 22.

The Raiders are slated to begin their season there in September.

The stadium is being partly financed with $750 million generated from an increase in the Las Vegas hotel room tax, which means that even with the city’s casinos closed for at least 30 days, there is plenty of money in reserve to complete the facility.

Construction is also moving forward on the 1.4 million-square-foot convention center expansion on a site along the northern end of the Strip.

Las Vegas Convention and Visitors Authority spokeswoman Lori Nelson-Kraft told CDC Gaming Reports that funding for the project is in hand.

“The LVCVA raised $900 million through the bond markets and has also made transfers from our general fund amounting to more than the remaining $80 million necessary to complete the project.”

The expansion is expected to be completed by the end of the year, in time for the January 2021 Consumer Electronics Show, one of Las Vegas’ largest conventions.

The 700-room Circa, which is expected to open in December, also has construction workers on site, said a spokeswoman for developer Derek Stevens.

The 3,500-room Resorts World, under development at the north end of the Strip by Malaysia-based resort conglomerate Genting, is expected to open next July.

The property’s president, Scott Sibella, said he is working with lead contractor, W.A. Richardson Builders, “to ensure appropriate measures, including social distancing and good hygiene practices, are being taken to protect the health and safety of our workers while they remain on site.”

He said employees who work in closer quarters, such as the administrative offices, and who can perform their jobs remotely, are required to work from home.

“This is a constantly evolving situation and we will continue to evaluate and take direction from local, state and federal health authorities to determine appropriate next steps,” he said.

At the Allegiant site, Tommy White, secretary-treasurer of Laborers Local 872, said, “We are very proactive about what’s going on with the virus. We supply hand sanitizer. We’re also allowing our sites to split the shifts to where one whole shift comes off the job site before the other shift comes on.”

Likewise, at the convention center, Nelson-Kraft said the LVCVA is working with the contractor to ensure proper social distancing and other health and safety measures are in effect during the remaining construction.

Officials in Atlantic City have announced they will seek a court order to have the former Trump Plaza Hotel & Casino demolished. A video recently posted on social media showed large chunks of debris falling from the structure’s facade to the sidewalk below.

Lawmakers in the town say the former gaming hall, closed for years, is a safety hazard, particularly given its location on the Boardwalk, a famous oceanfront promenade traveled by millions of people each year.

During a news conference last week, Mayor Marty Small Sr. said the city and the building’s owner, Carl Icahn, have been engaged in “good faith negotiations” over the future of the shuttered casino hotel, but the “game has changed,” as the old Plaza continues to deteriorate.

“Our legal department has been working hand-in-hand with the state of New Jersey on this matter,” said Small, who added he is willing to take “aggressive” action on the matter.

“Today, we are saying to Carl Icahn that we want this building torn down,” the mayor said. “We want the world to know that we mean business.”

But apparently Atlantic City officials failed to talk to Icahn before holding the press conference. Hunter Gary, president of real estate for Icahn Enterprises, issued a statement last week.

“We are puzzled by the city’s actions,” Gary said. “In fact, we have already decided to demo the building and have commenced the process, including finalizing contracts. If the mayor had simply called us instead of holding a press conference, we could have updated him too.”

Icahn bought the building in 2016 when he purchased the debt of bankrupt Trump Entertainment Resorts. According to the Press of Atlantic City, the city has put a 24-hour police detail in the vicinity of the property to prevent passersby from using the sidewalk next to the building. Additionally, city officials said a portion of the Boardwalk would be fenced off as a precautionary measure.

Small said estimates to demolish the former Trump Plaza were between $11 million and $14 million.

Anthony Cox, a city construction official, said an “imminent hazard notice” was sent “to the owner and agent.”

Fire Chief Scott Evans added that the Plaza’s oceanfront location make it susceptible to the elements, and exposed portions of the building could cause water damage to spread.

“Sooner or later, the water is going to work its way into different areas,” Evans told the Press. “And through expansion and contraction, these connections are going to fail. We’re going to see more panels fall. This is a serious hazard.”

A new survey shows that 61 percent of New Yorkers support legalizing remote sports betting in the state.

State Senator Joseph Addabbo, the Queens Democrat whose push for legalization has been repeatedly rebuffed in the Legislature, said he plans to use the poll’s results to argue for including remote wagering in the state budget for the next fiscal year.

With more than 3,000 confirmed cases of the coronavirus late last week and at least 20 deaths, New York has been especially hard hit by the contagion. The state also is facing a projected $6.1 billion shortfall in the 2021 budget, and with taxpaying land-based gaming in disaster mode in the wake of last week’s closure order by Governor Andrew Cuomo, Addabbo may finally have the silver bullet he’s lacked up to now.

“Given the fact that the sports betting industry is growing rapidly, along with our current budget’s need for revenue and educational funding, the time is now,” he said.

The survey was commissioned by DFS giants DraftKings and FanDuel, both of which now found themselves on the outs in New York after last month’s state Supreme Court decision upholding a 2016 ruling that the legislature overstepped its authority in legalizing daily fantasy sports without an amendment to the state Constitution.

The poll indicates that 62 percent of voters surveyed disagree with that decision compared to 24 percent who agree.

Not surprisingly, it also found the strongest support for remote wagering, which would include phone betting, among men younger than 50. Significantly, though it scored almost as high across the demographic spectrum, garnering pro sentiments in the range of 66 to 71 percent from Latinos, college-educated white voters and women of color.

It also showed that 44 percent prefer legalization in the Legislature as opposed to 30 percent who want a constitutional amendment, the position held by the governor.

As the coronavirus continues its lethal march across the U.S., for the first time in Las Vegas’ long, glitzy history, the lights on the Strip are out, and operators are groping for ways to deal with a crisis without precedent.

The monthlong closure ordered by Nevada Governor Steve Sisolak on Tuesday applies to all non-essential businesses𑁋casinos, machine gaming venues, bars, movie theaters, restaurants, fitness facilities, and even Hoover Dam. It came in response to the state’s first confirmed death from the contagion, which has infected at least 50 Nevadans, including two Las Vegas resort workers.

“For gaming companies, it’s critical spending only right now,” said Steve Gallaway, principal for Global Market Advisors. “We’re seeing development projects being canceled, and rightly so. It’s battening down the hatches, figuring out what bills have to be paid and how much capital is needed to stay in business. Casinos care about their employees, they want to make sure they’re provided for, and also they have to make sure they remain solvent.”

As of Wednesday, the number of confirmed cases in the U.S. approached 7,500. The death toll had hit 117. In the three months since the virus was first identified in China, more than 200,000 people have been infected worldwide, and more than 8,000 have died.

The Trump administration is considering invoking wartime powers to prevent a complete economic shutdown. Officials are warning the nation to prepare for critical shortages in health care and disruptions to daily life that could last 18 months or more.

As it stands currently, with the economy sinking into a certain recession and Wall Street in full-blown panic, gaming investors have followed everyone else in fleeing for the exits. Prices have blown past their 52-week lows, with no bottom in sight.

“I think it’s inevitable that all casinos will close down temporarily due to this epidemic,” Gallaway told GGB News. “The question is, is it for two weeks, four weeks, eight weeks? It’s the length of the shutdown that’s going to determine the effect on the economy.

“Remember, too, there’s a ripple effect. This is not only operator revenues we’re talking about, it’s payroll for employees, which is going to impact consumer spending. This is going to ripple throughout the entire economy.”

Brendan Bussmann, GMA’s director of government affairs, added, “This is way bigger than anything the industry has gone through, including 9/11 and the Great Recession.”

While it’s still too early to assess the financial impact of a monthlong closure of Nevada’s principal industry, it’s sure to be severe. Gaming taxes are second only to sales taxes as a percentage of the state’s annual budget. According to the Nevada Resort Association, leisure and hospitality directly employ one of four workers in the state, and generate an economic output of around $68 billion a year.

Sisolak said over the weekend that the state was in “relatively good shape” to pay unemployment claims, but cannot do so indefinitely. The state was working to get additional assistance from the federal government.

In Las Vegas this week, the industry’s largest labor union, Culinary Workers Local 226, entered emergency negotiations with operators to secure protections for its workers, including paid sick days and up to six months of paid health benefits for laid-off workers.

Matt Sodl, a principal of Innovation Capital, an industry consultancy specializing in investment, finance and M&A, said the human factor will figure uppermost in the minds of management adjusting to what he describes as “Armageddon.”

“You have to make sure money is flowing to your employees—they’re your critical resource,” he told GGB News. “It’s hard to find and keep good people. So they’re going to prioritize their employees, first and foremost. Casino operators will be stepping up and making sure their employees get paid. One hundred percent.”

Then there’s the obvious need to focus on other essential costs.

“Isolate the draconian downside payments that have to be made, whatever you need to stay in business,” Sodl advised. “Make sure you have sufficient liquidity, and prepare for uncertainty. If you think you have enough, you don’t. We’re talking to a lot of our clients about this right now.”

Examples of the extraordinary measures being taken were in evidence last week, with MGM Resorts International’s decision to cancel a planned $1.25 billion share buyback and Wynn Resorts’ announcement that it would begin to draw down on its $850 million revolving line of credit.

Sodl believes we’ll see more𑁋like lenders deferring interest and principal payments, and opcos deferring the fixed rents they’ve contracted with the real estate investment trusts (REITs) that own their properties.

“They’re stakeholders in this as well,” he said. “That’s the Armageddon we’re in right now. We’re in a war against this virus. Everyone has to do what they can and do their part.”

But will it be enough?

“I don’t think necessarily it’s a long-term problem,” Gallaway said. “But we don’t know. If it last longer than two months, we’re going to see a lot of bankruptcies and a lot of corporate restructurings.

Over the past two weeks, various Pennsylvania casinos began shutting down operations voluntarily to deal with the Covid-19 crisis.

On Monday afternoon, the Pennsylvania Gaming Control Board made it official: The board instructed any of the 12 casino properties that remained open to close to the public by 6 a.m., Tuesday, March 17.

“The order to close follows the rapid expansion of reported Covid-19 cases, and is aimed at mitigating the spread of the virus,” the board said in its press announcement of the closure. “While the closure of the casinos is temporary, there is no specific indication of when reopening will occur.”

As it turns out, only six properties had not closed by that time. Half of Pennsylvania’s casino licensees had already taken the initiative and closed on their own.

“Valley Forge was the first to close; Parx was closing, Harrah’s Philadelphia was closing,” Richard McGarvey, spokesman for the Pennsylvania Gaming Control Board, told GGB News. “Rivers in Philadelphia voluntarily closed, and others were in the process of voluntarily closing when we made the announcement. In the end, they all closed by order of the board, but we do that in conjunction with the (advice) coming out of the governor’s office, and out of the Pennsylvania Department of Health.”

Meanwhile, Penn National Gaming voluntarily halted construction on its two licensed mini-casinos—Hollywood Casino York at the York Galleria Mall, and Penn National Morgantown in Berks County.

Jay Snowden, president and CEO of Penn National Gaming, said in a statement that the construction halt is a voluntary move to minimize the economic effect of the Covid-19 shutdown on the company. “We fully support the governor’s effort to try to stem the tide of this unprecedented public health threat,” Snowden said. “We also believe it’s prudent to revisit any and all capital expenditure commitments in order to help preserve liquidity in light of the impact of Covid-19 on our business.

“We look forward to continuing to consult with the governor’s office, as well as local, state and federal health authorities to determine when construction might resume. In the meantime, we appreciate the patience, understanding and support of our community leaders in Morgantown and York, as well as our local construction teams.”

As of Thursday, there was no official announcement from Cordish Companies on its two Pennsylvania construction projects under the Stadium Casino subsidiary—Live! Casino & Hotel Philadelphia, and its licensed mini-casino, Live! Casino Pittsburgh at the Westmoreland Mall in Western Pennsylvania.

However, McGarvey indicated it is likely that construction will be halted as well, although not under the board’s direction. “We do not direct them on that particular front; we were really concerned about the public coming into the casinos and the gatherings and the entertainment side of it, not on the construction side,” he said.

“The public health and safety of patrons, casino employees and others are of paramount importance,” the gaming board’s statement said. “The board is continuously monitoring developments and will update licensees and the public as frequently as possible with any new developments. Up-to-date information on the impact of the Covid-19 virus on the commonwealth’s gaming industry regulated by the Gaming Control Board can be found on the agency’s website.”

The closure brings the second-largest casino gaming market in the U.S. from a revenue standpoint to a grinding halt. The state has 12 operating casinos, plus the 13th and three mini-casinos under construction.

Pennsylvania also has a thriving sports-betting business, which is likewise at a standstill because of the suspension of sports due to the Covid-19 crisis. In February, Pennsylvania sportsbooks surpassed $2 billion in lifetime bets. February handle produced $4.7 million in gross revenue, with $1.6 million going to the state.

“The next few months are impossible to predict until we get a better handle on how long the coronavirus will affect not just sports and the gaming industry, but all of daily life,” said Dustin Gouker, lead analyst for PlayPennsylvania.com, in a report published Wednesday.

“The immediate outlook of sportsbooks is secondary right now. But there is little doubt that the industry will be affected significantly, at least in the short term…

“After a slow start, Pennsylvania sportsbooks have continually matured into the market that we all thought it would be when the state first legalized sports betting,” Gouker said. “The state has only begun to scratch the surface of its potential. In fact, Pennsylvania was on track to reach $4 billion in lifetime handle by the beginning of the NFL season. But it would take a quick recovery from the coronavirus outbreak to reach that milestone now.”

Online casino gaming is one way the state can make up some of that money. The state’s online casinos and poker rooms generated a record $19.5 million in revenue last month, up from $14 million in January.

“Online casinos continue to jump into the market, including FanDuel/Valley Forge Casino and BetAmerica in late January,” said the PlayPennsylvania.com report. “But unforeseen issues, including iOS problems that have reduced the size of game libraries, and relatively high fees and tax rates, have conspired to slow the industry’s start compared with booming New Jersey.

“Online casinos have dealt with headwinds that have been more forceful than anything that New Jersey operators have had to face,” Gouker said. “These are mostly just growing pains, and it is a near-certainty that online casinos will take off.”