After over two months of unprecedented shutdowns due to the coronavirus pandemic, Las Vegas casinos have been given a green light to reopen on June 4, a move that could result in a major rebound for their beaten-down stocks.
Casino operators have had a rough 2020 amid widespread business shutdowns caused by the coronavirus pandemic: Major operators like Wynn Resorts, Las Vegas Sands and MGM Resorts have seen their share prices plunge by 25% or more so far this year.
According to investment researcher Morningstar, while the coronavirus pandemic continues to “materially affect near-term travel and leisure demand,” all three major casino stocks are trading at significant discounts to fair value: Wynn (22% discount), MGM (43%) and Las Vegas Sands (18%).
As states begin to lift lockdowns and allow some businesses to reopen, casino stocks have recovered somewhat on the possibility of a faster than expected economic recovery.
On Tuesday, Nevada Governor Steve Sisolak gave the state’s casinos the green light to reopen starting June 4; Las Vegas Sands rose 6.5%, Wynn 8.5% and MGM 11% on the news.
Caesars Entertainment, Las Vegas Sands, Boyd Gaming Corp., MGM and Wynn Resorts say they will open that day.
It won’t be business as usual however, with social distancing guidelines and other protective measures such as plexiglass barriers in effect; Casinos will also be operating at 50% capacity, meaning the industry won’t be returning to normal levels of business just yet.
With Vegas slated to reopen next week, casinos could be high-risk areas for the spread of coronavirus, former Food and Drug Administration Commissioner Dr. Scott Gottlieb told CNBC on Thursday. “You look at Las Vegas reopening its casinos… Those are the kinds of settings where I think you have more risk, where you have a lot of people crowding together,” he warned.
Amid shutdowns caused by coronavirus, Nevada’s unemployment rate surged to 28.2%—the highest in the entire country—last month, according to recent data from the Bureau of Labor Statistics. Unemployment surged, up from 6.9% in March, as the state was hard-hit by casino closures and a standstill in the tourism industry.
At the request of Gov. Sisolak, Nevada’s Gaming Control Board published requirements for a “phased and incremental resumption of gaming operations.” Those health and safety guidelines say casinos will be responsible for limiting occupancy to 50%, making masks available and checking the temperature of guests. It also requires staff to follow disinfection and social distancing protocols.
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