June 10, 2023


Be life confident

Protests may derail an expected strong reopening for Las Vegas casinos

3 min read

Las Vegas Metropolitan Police Officers walk down Las Vegas Boulevard during a Black Lives Matter demonstration demanding justice for the death of George Floyd on May 31, 2020 in Las Vegas, Nevada.

Denise Truscello | Getty Images

Las Vegas is getting ready to launch a “Welcome Back” ad campaign to encourage visitors to come. But now guests will have to weigh not only the risks of coronavirus but also of civil unrest.

Thursday is the scheduled reopening for Nevada’s casinos, but over the weekend, the National Guard was called up to respond to riots in Reno, and the mayor declared a citywide emergency. In Las Vegas, squads of police shot rubber bullets at protestors and released tear gas on the Strip.

The protests and unrest have the potential to disrupt what had been a surprisingly strong response to the scheduled reopening.

Last week, Caesars Entertainment said demand for reservations was so strong, the company decided to reopen a third property, adding Harrah’s to Caesars Palace and the Flamingo. MGM Resorts also added MGM Grand to its planned reopening list that already included Bellagio and New York New York.

“The current circumstances are tragic and negative for any business that requires physical access — certainly casinos would be included,” David Katz, a gaming industry analyst at Jeffries, said.

The same is true in Missouri, where the planned reopening of casinos is continuing Monday.

Eldorado Resorts is opening five casinos Monday in Missouri and Iowa, including Lumiere Place Casino & Hotels near the iconic St. Louis Arch. Over the weekend in and around that city, protests turned violent, with a man killed after being dragged by a FedEx truck.

CNBC reached out to a number of gaming operators to ask for comment or corporate statements. Most declined, except for Caesars, which said it is closely monitoring developments.

Barry Jonas, a gaming analyst at SunTrust Robinson Humphrey, said, “We think initial pent-up demand for the Strip (and most U.S. casinos) will center on drive-to gamblers who are more risk tolerant.”

In Las Vegas, drive-in tourists accounted for roughly half of all visitation. With worries over the safety of air travel in the midst of the coronavirus pandemic and the widespread cancellation of conferences and conventions, casinos predict drive-to visitors will make up the bulk of their revenue in the near term.

“Sustained protests certainly don’t help bring back a wider audience of leisure and group customers,” Jonas said. “But we don’t see those segments returning in full force anytime soon anyway, given coronavirus.”

Katz said he anticipates that there will be some impact to traffic based on fear in many markets. However, he said the larger question is whether the demonstrating reaccelerates the number of Covid-19 cases, “which creates the potential for a larger lingering impact.”

Shares of MGM, which have a market value of $8.8  billion, were up more than 4{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} in trading Monday. The stock is down more than 46{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} since the year began. Meanwhile, Caesars shares inched up less than 1{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f}. Caesars’ stock has a market value of $7.9 billion and it has fallen nearly 16{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} since the start of the year. 

Eldorado shares, which have a market value of $2.8 billion, have fallen nearly 39{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} year to date, but were up more than 2{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} in trading Monday. 

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