The state of Nevada and, in particular, the city of Las Vegas have been devastated by the COVID-19 pandemic and the resulting shutdown. For more than two months, the industry that drives the economy of Nevada, the casinos, have sat silent. On June 4, some of those casinos reopened for customers but, as writer Jeff Hwang found out in writing for The Motley Fool website, is it possible that the state has opened too soon?
Hwang Notes Issues for Nevada Casinos
Starting in Las Vegas once the casinos reopened on June 4, Hwang toured the state, as he recounted in an article on the Fool website. For almost two weeks, he skipped around the different casinos in the state, from the Strip in Las Vegas to the border casinos in Laughlin to the mountains in Reno. It gave him a great perspective on the state of the casinos in Nevada and, perhaps, the idea that they might have opened too soon.
Hwang notes that there are significant problems in Las Vegas that have only been accentuated by the COVID-19 outbreak. Hwang states that the number of visitors to the city has remained flat for the past five years (despite peaking in 2016), which he blames on the elimination of the low-end hotels in the city in favor of the high-dollar resort properties. Hwang also points out that the gaming itself has brought some problems, including the house trying to take too much of an edge and the hotel operations that attempt to monetize every part of their business, most notably resort fees and parking.
According to Hwang, the two-month shutdown should have given the casino industry a chance to examine their situation. “In order to solve those problems,” Hwang writes, “the Strip casino operators have responded to their opportunity to hit the reset button and do this right by reopening and doing…virtually nothing.” Hwang says that, instead of reexamining the situations as they are after the shutdown and coming up with adjustments to make Las Vegas more welcoming, it has instead opted to try to get more out of its patrons at its restaurant dining being hit with “COVID-19 surcharges.”
Increasing Numbers Indicate Possible Resurgence of Virus
Hwang also observes that the casinos in Nevada, and especially in Las Vegas, also haven’t taken the proper precautions regarding containing the COVID-19 virus. “By opening without any visitor restrictions whatsoever – for example, requiring COVID-19 testing prior to arrival in Nevada or blocking visitors from hot spots such as Florida, Texas and especially neighboring Arizona – Las Vegas is virtually guaranteed to have an outbreak,” Hwang writes in his piece. He also demonstrates that it isn’t getting any better anytime soon.
Hwang notes that, on Tuesday, the state of Nevada reported a new high in cases of the COVID-19 virus and that it was the fourth time in eight days that a new high had been set. Positivity rates are also on the uptick, from 2.5% in May to 9.8 on June 22. This was the reason that Governor Steve Sisolak issued an edict that all people in public in Nevada would have to start wearing masks to try and stanch the reemergence of the virus.
But Hwang also introduces another potentially worrisome fact – that the casino industry in Nevada knew there would be a reoccurrence of the COVID-19 virus once customers started coming back. “When companies open the Strip knowing the likelihood that an outbreak will happen, they are signaling to the world that the safety of their frontline employees does not matter,” Hwang writes, “that the safety of Las Vegas does not matter; and — more importantly to the area’s prospect of a recovery — that the safety of their customers does not matter.”
Hwang Offers Suggestions for Salvaging the Restart
While he is extremely critical, Hwang also offers some thoughts for how the Nevada gaming industry can correct the issues that it is facing. Whether the industry takes Hwang’s suggestions under consideration is unknown, but the problems that Nevada and Las Vegas continue to face are far from over. “The city can screw this up,” Hwang concludes. “And what happens next matters.”