Earning Reports Show US Casino Chains Struggling with Revenue
American casino chains posted a huge slack in revenue for the third consecutive quarter of 2020. This is hardly surprising as coronavirus infections continue to spread like wildfire. A few companies performed better than others as per the earnings report issued between October and November.
According to an analysis by the American Gaming Association, revenue was up 294% compared to Q2 2020 at the country’s commercial casinos. While the success is partly due to partial reopening since June, innovative strategies also played an important role in boosting the figures.
However, most of it was due to a quick shift in patron behavior motivated by government-initiated mandates, which continues to act as the Wild card and draw additional interest from punters around the country. According to the AGA’s report, more than 911 of the 944 registered casinos in the US are now open for business. The figures include 442 commercial casinos and 469 tribal properties.
What does the Number Say?
Gaming revenue has declined by 36.5% Year-on-Year during the first nine months of 2020 compared to the US GDP’s 3% over the same period. According to AGA President and CEO Bill Miller, “Urgent congressional action is required as the state, and local officials continue to respond to COVID-19 outbreaks. The authorities need to provide additional COVID-19 relief measures. The gaming communities and its employees depend on it”.
Most of the profitable ventures in this quarter resorted to some form of cost-cutting endeavors to remain afloat. The AGA pegged third-quarter commercial gaming revenue at $9.04 billion, a chunk of which came from Caesars Entertainment Inc., Penn National Gaming Inc., and MGM Resorts International.
Of the three, Penn was the most profitable venture with a net income of $141 million. Community experts have suggested since the beginning of the pandemic that regional gaming companies would survive the storm due to their geopolitical diversification. For instance, Boyd had a better run than Wynn Resorts Ltd. and Las Vegas Sands Corps.
Travel Ban Affecting Revenue?
Boyd operates race tracks and casinos in over 10 states, while Las Vegas Sands runs Palazzo, The Venetian, and the Las Vegas Sands Expo and Convention Center. Wynn Resorts, on the other hand, operates Encore at Wynn Las Vegas and Encore Boston Harbor. As Wynn and Sands continue to reel under the negative impacts of airline schedule cutbacks and travel restrictions, Boyd survived the lockdown better than many of its competitors.
According to Sands Chief Operating Officer, Rob Goldstein, “I don’t see a lot of change at our Vegas properties anytime soon or until there’s a change in the Governor’s policy.” It’s no surprise that companies like Wynn, Sands, and MGM are reliant on the mid-week customers that arrive to attend the numerous trade shows and meetings in Vegas. And the ban on traveling has hurt revenue.
Wynn and MGM have also suffered major losses in Macau, which is a major source of income. But the situation isn’t going to change anytime soon as the Chinese mass-market behaves quite similarly to the US and has boycotted casinos to date.