Casino Shutdown Hits Caesars, Gambling Industry In Survival Mode

Casino Shutdown Hits Caesars
Reading Time: 3 Min
Image: Shutterstock
Caesars Entertainment Corp (CZR.O) reported declines in revenue as it halted operations of its casino, following government lockdown aimed at containing the spread of the fatal Covid-19 pandemic.

The gambling industry, along with industries associated with it, struggles to survive the hit caused by restrictions imposed to flatten the curve of covid-19 infection.

Tony Rodio, chief executive officer at Caesars, said in a statement that their first-quarter performance reflects the significant revenue declines they experienced as a result of the closures and stable year-over-year labor costs in March. The CEO said that Caesars takes aggressive steps to survive its financial dilemma. The company decided to furlough 90 percent of its employees in North America.

The company revealed that it closed the operations of all its casinos around the globe since March 17. They also revealed that they are losing around $9.3 million every day until March 31, with not less than $2.6 billion in liquidity.

Barry Jonas, a SunTrust analyst, said that Caesars need to focus on its cash burn rate and the company’s reopening strategy. Caesars plans on opening the doors of its casinos in Las Vegas, Atlantic City, Council Bluffs, and Lake Tahoe.

The revenue of the company dropped 11.5 percent to $958 million in the first quarter. Refinitiv data revealed that its net revenue is down 13.6 percent to $1.83 billion, missing expert projections of $2.04 billion. The company’s net income attribute was $189 million during the first quarter, suffering a loss of $217 million when compared to last year, and lost 36 cents per share basis.

COVID-19 threatens the industry in 2020

Top gambling operators see rough roads ahead in UK’s gambling market. The gambling industry is now legal and operational in the territory after long years of pleading for reform of the 2005 Gambling Act. Fears, however, are rising because of significant setbacks in the industry like concern on problem gambling, stories of gambling firms hit by massive fines, and the financial stability caused by closures of casinos.

Casino operators are called for reforms in the gambling law for years before the covid-19 crisis. New guidelines might be imposed to protect operator interest and the safety of the clients. The industry might see new maximum stakes, deposit limits, bonusing restrictions, as well as new rules to reduce the massive spend on sponsorship and advertising.

Recently, the Betting and Gambling Council (BGC) urged the Welsh government to include bingo halls, betting shops, and casinos to the Business Rates Retail Discount to protect workers from the gambling industry.

The BGC said that jobs across the sector are at risk if the discount does not cover them. The statement of the regulating body said that Wales is home for not less than 300 betting shops and four casinos that generate more than 2000 jobs.

The African Gambling Industry reported that the casino sector continues to generate a considerable contribution to the gross revenue of the industry. However, its market share fell because of the rising popularity of bingo, betting, and limited payout machines.

Relevant news