It should be obvious that any business forced to shut down for a couple of months is going to see a major impact on its bottom line. The global casino industry has been hit particularly hard by the coronavirus pandemic, and any company tied to gaming operations is feeling the heat. While there is talk by some operators of trying to reopen their tables and slot machines within the next couple of weeks, those plans may be thwarted by officials who prefer to take a more cautious approach. As COVID-19 lingers on and cash wells dry up for almost everyone, both Aristocrat Leisure Ltd. and Bloomberry Resorts, have been forced to update their positions, and the new picture is darker than before.
In the middle of last month, Australia’s Aristocrat, which supplies slots and digital casino games to the gaming industry, was convinced that it would not have any major issues with staying afloat during the pandemic. It reported a strong financial position and budgetary measures designed to reduce expenses and didn’t foresee having to take drastic measures to counter COVID-19’s attack. However, as much of the casino world remains on lockdown, possibly to emerge sometime next month, Aristocrat has been forced to re-evaluate its position.
In a filing (in pdf) with the Australia Securities Exchange from today, Aristocrat announced that it will suspend its planned interim dividend for the corresponding 2020 fiscal year. Whereas as much as 80% of the workforce was previously able to continue to work remotely, that will no longer be possible, and the company adds, “Around 1,000 staff will be stood down until the end of June 2020, principally in land-based sales, service and manufacturing operations, reflecting venue closures and uncertain reopening time frames. Around 200 roles will be removed permanently from the business, reflecting changed priorities.”
These changes don’t necessarily mean that Aristocrat is short on cash – it still has “over $1 billion in available liquidity.” However, it has to make smart business decisions to counter the long-term impact of the coronavirus, as well as the rebuilding process once things begin to return to normal. Overall, a full recovery for the gaming industry could take anywhere from 16-24 months.
Aristocrat isn’t alone. Bloomberry Resorts, the casino operator based in the Philippines, has a number of operations under its umbrella and they are all feeling the sting. All casinos in Manila, the country’s capital, will remain shuttered until the middle of May, at the earliest, and Bloomberry had already indicated that 2020 would most likely be a write-off for the company. Casinos in Manila, including Bloomberry’s Solaire Resort & Casino, have been out of commission since March 15.
The company reiterated in a filing (in pdf) with the Philippines Stock Exchange last Friday statements previously made to various media outlet by chairman and CEO Enrique Razon, explaining that any loss “is possible due to the suspension of casino operations of BLOOM in compliance with the order of PAGCOR and due to the Enhanced Community Quarantine (ECQ) in Metro Manila. The ECQ in Metro Manila, which has just been extended to 15 May 2020, is intended to prevent the spread of the virus which causes the COVID-19 disease. Another reason is the severe contraction of businesses worldwide caused by the lockdown imposed by most countries around the world which mean [sic] lower travel and lower priority for leisure activities. Management is currently preparing for the eventual restart of operations and is designing stringent cleanliness and social distancing protocols that are appropriate for an entertainment venue like Solaire.”
If necessity is the mother of invention, the coronavirus has become the impetus for change in the casino industry. Complacency for decades, on the part of many operators, paved the way for negative performances as COVID-19 began its attack, and many companies are now rethinking their gambling-centric business models. Bloomberry is one, and has already stated that it plans, once recovery can begin, to spread out into other business segments, including hospitality and other “non-gaming assets.”