PA Casinos Aren’t Exactly Back To Normal Yet, But Man They’re Getting Close

April revenue numbers to be released next week should provide evidence of how much progress casinos have made in recovering from pandemic.
road to recovery

The rebound of the casino industry from 2020’s sad, dark nadir appears to be in full swing in the spring of 2021, with Pennsylvania’s properties no exception.

National operators, including those with casinos in Pennsylvania, have reported seeing a resurgence of gaming revenue and overall patronage in April-May to accelerate positive trends they already experienced in the first quarter of the year.

Though they are handicapped by some operating restrictions still in effect and difficulty finding new employees to fill open positions as they ramp back up, casino executives are generally more optimistic than they have been in months as a majority of the population becomes vaccinated and willing to return to large-scale social situations.

“January and February were good, March was exceptional, and that strength is continuing into April,” Boyd Gaming CEO Keith Smith, whose company owns Valley Forge Casino Resort, reported in an April 27 conference call with financial analysts.

Penn National Gaming CEO Jay Snowden was much the same, if not even more ebullient, in a more recent first quarter report last Thursday discussing the company’s national performance.

“Our record first quarter results highlight the robust recovery in our land-based business,” said Snowden, whose company owns the Hollywood Casino in Dauphin County and Meadows Racetrack & Casino in Washington County. “More impressive is our performance in March and April, which reflects the additional easing of restrictions and an increase in the percentage of people vaccinated.”

The Pennsylvania Gaming Control Board will release revenue figures next week indicating how the state’s 14 casinos performed in April. In March, slots and table games revenue were off 21.5% from March 2019 at the 12 casinos that were open two years ago (the fair year for performance comparisons, since in March 2020 the industry was shut down half the month by the pandemic’s start).

That’s a significant drop, but much better than the 42.9% revenue decline in all of 2020 compared to 2019. In the full first quarter of this year, slots and table revenue was down 26.8% from January-March of 2019 at the long-established casinos. (If the new Live! properties in Philadelphia and Westmoreland County are counted, statewide revenue was down 19.6%.)

Alcohol makes a big difference

No one is expecting this April’s revenue figures to show casino revenue yet returning to the numbers from two years ago, but a big bump is likely. That’s because on April 4, the state lifted alcohol restrictions that had prevented casinos from operating bars, serving customers alcoholic drinks on the gaming floor, or allowing anyone to consume alcohol after midnight.

“Not having alcohol was really difficult,” especially when it was still allowed at out-of-state casinos, said Kathy McCracken, general manager of Wind Creek Bethlehem. “It’s just not giving the customer the full escape.”

Casinos had already begun seeing a pickup in foot traffic compared to dead of winter, and after April 4 their volume and atmosphere — particularly on weekends — began more closely resembling pre-COVID days.

“Now you can come out and have a few drinks and enjoy yourself” in the manner common to casino visitors, instead of only consuming drinks with sit-down meals, as had been the case for months, noted David Parfrey, vice president of marketing for Mohegan Sun Pocono.

Meadows General Manager Tony Frabbiele said there was no better example of the difference than May 1, the day of the Kentucky Derby, at the racetrack-casino.

“It was a crowd we hadn’t seen since 2019,” he said. “The property was alive. It was electric. The gaming day was great, alcohol sales were fantastic, food sales were fantastic.

“People were out, and it shows the public was ready to return to normal and get out to entertainment venues, and they want to be out and be social.”

Of course, not every day is a Kentucky Derby Saturday. But gradually, the casinos’ offerings are resembling what existed before March 2020. The state’s April 4 easing of restrictions also increased allowable capacity to 75% from 50%, and a new relaxation taking effect May 31 will return capacity to 100% of normal limits.

Frabbiele said capacity limits don’t generally reduce the volume of customers able to get on a vast gaming floor, as it rarely reaches the permissible maximum, but it has restrained the number of people able to make use of amenities such as the casino’s restaurants. Each part of the casino has been capped at 50% or 75%, not just the overall building.

Some operators weathering better than others

While no operators in Pennsylvania have been able to match pre-COVID revenue levels, their individual experience varies widely.

In March, for example, while the statewide drop in slots/table revenue from 2019 for those casinos open at least two years was 21.5%, Mohegan Sun was down just 13.9%, while Wind Creek was off 32.8% and the Meadows 35.8%.

Frabbiele and McCracken, though at casinos on opposite sides of Pennsylvania, both said some of their struggles have to do with being close to borders with other states that have casinos and that didn’t necessarily lay down the same restrictions upon them as Pennsylvania authorities did. In addition, the Meadows has new competition in recent months from the Live! Pittsburgh mini-casino in adjacent Westmoreland County.

Now, their casinos and the rest are looking to take advantage of guidance received from the gaming board last week that lets them drop their 6-foot social distancing rule at the same time they can return to 100% capacity on May 31. It means slot machines that have been turned off — state figures show fewer than 20,000 were in operation in March compared to more than 25,000 in March 2019 — can be turned back on.

Also, table games can be restored to their full number of positions, such as six players being allowed at a blackjack table instead of three. Casino executives said there will probably be options available, so that more cautious customers can sit at a table with three seats and plexiglass dividers while other tables may have full seating and the present plexiglass removed.

Mask mandates will remain in effect for guests and employees, by state order for the time being, and an indoor smoking ban imposed by the gaming board will remain in effect for at least as long as face coverings are required.

“It’s not like May 31 everything gets ripped out [in the way of health precautions],” Parfrey said. “As a smart operator, you have to be aware the post-COVID world is still undefined to some degree. … Maybe you’ll still see plexiglass, but not at every slot machine — the same with table games. Signage will stay up for the near future. We do need to remind guests of our protocols.”

Finding employees is a big issue

Despite the gradual return to normalcy, casino visitors can’t count on seeing all of the things they took for granted at the gaming venues prior to March 2020.

Buffets have not returned, and it’s uncertain if and when they will. Wind Creek has not reopened its poker room, though McCracken says that will happen later this year. Mohegan Sun has not restored valet parking service. Not all restaurants are open at the casinos.

Big promotional giveaways that draw crowds have not yet returned, although officials are starting to plan for that, the same as for big entertainment events. The casinos are beginning to book a summer schedule of events that could draw throngs, as they only recently found out that social distancing requirements would be dropped so soon.

The return of many amenities, however, is dependent on the ability to find workers, as the casinos all say they’re having difficulties with that. They all furloughed hundreds of employees in the months after the pandemic arrived in order to adjust to new volumes and revenue streams. Now that they’re ready to see those workers again, it’s not as simple as calling up the ex-employees and welcoming them back. Many are advertising job fairs.

“A lot of people have moved on and found different jobs, or else they’re affected by unemployment benefits and the stimulus money” that reduces their incentive to return to work immediately, McCracken said.

Frabbiele said the Meadows currently employs about 600 team members, compared to its former level of 1,000, and he would like to hire 70 more “today” but is having trouble.

“We have exhausted all of our recall lists,” he said, dealing with competition from so many other employers in the area building up their own operations at the same time, especially in the food and hospitality industries.

All in all, such problems are good ones to have, compared to being shut down for one-third of the year in 2020 or being so restricted in what they could offer upon reopening last summer. They are making no predictions of just when they will hit pre-pandemic revenue levels, but they can sense it just over the horizon.

“April was definitely positive, and May is headed in that direction,” McCracken said. “Everything is headed in that direction.”


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