The second day of ICE North America’s Road Back series focused on how the gambling sector can work with regulators and legislators to help create a smooth path to recovery.
John O’Reilly, chairman and chief executive of O’Reilly Law Group moderated the webinar, featuring former Nevada Governor Bob Miller, Gaming Laboratories International president James Maida, Global Market Advisors principal Steve Gallaway and Dickinson Wright gaming attorney Jeff Silver.
Miller said he believed regulators, legislators and the industry all shared goals and so there should be great opportunities for cooperation.
“The main role of the industry right now, as is the main role of the government, is to work together to ensure the safety of our citizenry,” he said.
Maida, however noted that the current situation is completely unprecedented and this makes it difficult to be confident in the best path forward.
“In 35 years we’ve never seen anything like this,” he said. “There was a point when 100% of casinos across the world were closed. 100% of casinos in North America were closed for weeks if not months. Not in the 1990 market crash, not in the dot.com bubble crash, not after the 2008 financial crash, not even after 9/11 when air travel was suspended did we see anything like this.
“Many casinos are now reopening but most of these are working with restrictions and of course this affects profitability.”
Gallaway echoed this sentiment, pointing out that while projections of adverse scenarios are common, scenarios in which revenue drops all the way to zero are almost never modeled.
“We really have to look at this as a partnership with regulators and legislators to both protect people and allow casinos to make enough profit to stay open,” he said.
Silver added that the industry had no choice financially but to reopen, but that it must do this in a manner that is safe or it risks a renewed lockdown.
“Our choice now is to reopen our industry or we won’t have an industry, so all we can do is try to take the best advice possible,” he said. “We’re limping along but once we find an equilibrium with regulators, there is a pent-up demand.”
Maida added that while new regulations and restrictions for public health reasons are necessary, they must be proportionate and must allow casinos to still function profitably.
“In Michigan they said you could only reopen at 15% capacity,” he said. “That wouldn’t even pay the lighting bill at the Bellagio. There has to be some proportionality in all of this.”
Miller agreed with this, noting that extended closures may put some casinos out of business and would have deep long-term effects that could last well beyond the virus.
“I think the potential is to create a situation that we can’t recover from, so you have to keep casinos open as much as possible while dealing with the health of the citizenry,” Miller said. “I think it would be better to have a national policy rather than delegate it to states, but absent that, there has to be a combination of keeping businesses open and providing as safe an environment as possible and it is in the best interests of the industry to keep people safe.”
Silver, however, said major economics effects are likely already having an impact, as lower disposable income will lead to less spending at casinos.
“We have to think about disposable income because you need disposable income to gamble,” Silver said. “We’ve been talking about pent-up demand and that might apply at first but if people aren’t working they don’t have money and if they don’t have money they can’t spend money.”
Gallaway said it was important to recognize that revenue will not return to pre-Covid levels for a long time.
“Things might be positive in the long-term but it’s a long road back. Revenues might not return to pre-covid levels for at least 18 months, but I do look forward to the day,” he added.
“Before that, tough decisions will be made to lay off employees. You just can’t keep people employed when there’s no work for them, as unfortunate as that is.”
Silver concluded by noting that the industry has already responded to the crisis in a forward-thinking and innovative manner and that at this time regulators should grant the industry the freedom to explore new ideas.
“We as an industry are a very forward looking group,” Silver said. “The Nevada Gaming Commission has introduced rules allowing cashless wagering and IGT has already released new cashless products.
“That’s just one example of many. The regulatory environment is loosening up and regulators recognise the industry needs the freedom to adjust to this unpredictable new era we now find ourselves in.”
Miller said the road back would be a slow and experimental one, but that there are already reasons to be positive as many European and Asian countries move out of lockdown.
“We are in uncharted waters still,” Miller said. “It’s evident that nothing is a certain path through this dilemma. We’ve taken incremental steps.
“It’s a challenge and you first have to think about your employees and their safety, then you have to think about being profitable while still following guidelines and that is going to take time and it will be experimental. But I think when you look across the world, there is success in some areas.”
The Road Back series continues today, with the focus turning to changes in casinos’ core customer demographics in the wake of Covid-19. This brings together a remarkable series of founders and executives. Tune in at 8:30am PDT, or 11:30am EDT , and if you haven’t registered, you can do so here.