How COVID-19 Has Affected Casino Gambling in the United States

World Globe With a COVID-19 and Casino Background

The coronavirus pandemic began in December, 2019. The economic effect has been felt all throughout the world.

And the United States is now the center of the pandemic.

How does all this affect the future of casino gambling in the United States?

That might seem like a trivial question, but the economics of the situation clearly explain why that question is anything but trivial.

What Have USA Brick and Mortar Casinos Been Doing?

Many brick and mortar casinos throughout the USA have had to close their doors. The idea is that social distancing will slow down the spread of the virus, enabling our hospital system to keep up with the demand for services.

Online casinos, as a result, are seeing a significant uptick in business for two reasons:

  1. You can’t play at some land-based casinos right now.
  2. You probably have more free time than usual because of the state of semi-quarantine throughout the country.

Many brick and mortar casinos in the United States have an online business, too, but even more of them don’t have such an online presence.

The question becomes this:

Will the revenue from online gambling compensate for the revenue lost by shuttering the casinos’ doors?

And how long can the casinos without an online presence stay open before going broke?

How Much Money Is the Online Casino Industry in the United States Losing?

According to the American Gaming Association, if all the casinos in the United States stay closed for two months, this results in $21 million decrease in consumer spending.

How many casinos are closed in the United States?

Although many are gradually beginning to re-open – the original number was close to 94%.

And those casinos employ over 500,000 workers, many of whom are now unemployed – at least temporarily.

Vegas Strip at Sunrise

The American Gaming Association is, of course, lobbying the US government for bailout money, just like representatives of other businesses are doing.

What does that represent in annual wages?

If these employees don’t go back to work, we’re looking at losing $60 billion a year in wages. That’s going to have a big domino effect on the nation’s economy.

That’s also lost tax revenue.

What’s Happening to the Casinos in Las Vegas?

No city in the United States is more representative of the gambling industry than Las Vegas.

So, what’s happening there?

Although many have now since re-opened, the entire state of Nevada closed all casino doors – including those in Vegas – in the middle of March.

No other state economy depends on tourism as much as Nevada’s does. Over 42 million people visit the Las Vegas Strip every year.

The $2 trillion in relief that Congress has earmarked for businesses in the country doesn’t all go to the casinos in Nevada, but a lot of it will — $454 billion.

The question remains – is it enough to help these companies stay in business?

And what other effects will we see on the Nevada economy?

What About Casinos in Ohio?

Ohio casino gambling is an interesting case, too, as it’s one of the most recent states to legalize and regulate casino gambling. They opened four casinos in 2012 and 2013, in the following cities:

  • Cincinnati
  • Cleveland
  • Columbus
  • Toledo

The difference between Ohio casinos and most other casinos in most other states is that the casinos haven’t been doing well. In fact, their revenues have been dropping.

Hollywood Casino in Columbus Ohio

Some of this slowing has been attributed to the rise of online gambling, which offers perks that aren’t available to land-based casino gamblers in Ohio. New loyalty programs at brick and mortar casinos are supposed to help with this.

But those loyalty programs will have little effect during a pandemic. All these Ohio casinos are temporarily closed by order of the governor, too – who made the order about the same time as the governor of Nevada did in his state.

There’s More to Casinos Than Just Cocktail Servers and Dealers

Most casinos also operate hotels and/or resorts alongside their gaming facilities. These employees’ wages are also at risk. According to the American Hotel and Lodging Association, almost 4 million hospitality jobs have now gone up in smoke.

70% of employees in the hospitality industry have been affected at some point, many of whom were working at a casino hotel or resort. That represents $2.4 billion in lost wages every week.

And that’s on top of the money the casinos are losing for the employees in the gaming portion of the business.

Also, revenues from vacant rooms are massive — $500 million per day and $3.5 million per week.

Atlantic City was one of the last cities that still accepted hotel stays early in the pandemic, but for a time they had to stop taking new bookings. Even the properties that were still accepting guests were dealing with massive cancellation rates.

Won’t Government Bailout Money Save the Casino Industry?

Maybe.

Maybe not.

The effects of the coronavirus are having a massive effect on the world economy. That’s not just the casinos, but all kinds of other businesses, too.

These industries include airlines, bars, casinos, concerts, conferences, hotels, restaurants, and sports.

Many people with money don’t have anywhere to spend it, and all the industries on that list will want a piece of the bailout pie.

Who’s going to get that bailout money? Who SHOULD get that bailout money?

The first group that should get bailout money from the federal government is the workers of the United States. That’s what the $1200 stimulus check was all about anyway.

Across all industries, 20% of the workers in the United States have lost hours (if not their entire job) because of the pandemic. And these layoffs are just beginning. Most workers have little or no savings, too.

Sky View of Atlantic City Coast

Since the United States lags other developed countries in the providing of social insurance – things like child care, health care, and unemployment – it seems obvious that most of our bailout efforts should go directly to the workers who’ve built this country.

Workers aren’t the only entities needing bailing out, and here’s a group you might not have thought about:

Cities and states.

City and state governments are facing enormous economic pressures related to this event, and they’re going to look to the Federal government for bailout money, too.

States are running hospitals and providing Medicare, but they’re unable to print their own money. And their revenues are collapsing because of the collapse of their local economies, too.

It’s hard to argue that casinos are more deserving of bailout money than workers, cities, or states.

Businesses Will Receive Bailout Money, Too

If you agree that the business of the United States is business, you’re not alone. There’s no doubt that businesses will also see their share of bailout money.

But how much of that bailout money will go to the casino gambling industry?

Some people feel like casino gambling isn’t adding anything useful to society – that the casino industry just takes money out of the economy. This is simply not true. As I’ve already pointed out, casinos employ an enormous amount of people.

Will the casino industry end as we know it?

Probably not.

But it, like most other industries in the United States, will likely be forever changed by this health crisis.

Conclusion

It’s hard to overstate the effect of COVID-19 on the United States casino economy. This is an industry which has been growing rapidly now for decades. That growth has fallen off a cliff as a result of this situation.

Will casino gambling rise from the ashes like a phoenix?

It’s too early to tell.

Some businesses will probably survive, but others will probably fail.

Time will tell.