I never even thought it would happen once. A full shut-down of Las Vegas? A gaming industry that generates almost 12 billion dollars every year, shut down to almost nothing? Inconceivable. Or so I thought. In fact, if you look back at this video I released in February, right as COVID-19 was starting to bubble in the US, I said I didn’t think Las Vegas would ever shut down. Boy, was I wrong. But could it now happen a second time, too, give the current state of affairs? Would it make sense to do so? Let’s have a look.
First, it’s important to consider that – before governments even mandate anything at all – casinos have their own incentives to do a voluntary shut-down when it makes sense. If you recall, almost all of the big Las Vegas casinos implemented voluntary shut-downs at least a week before the government forced anybody to. When things are looking dire, I guess it makes sense… If their frequent players get sick (or, god-forbid, die) from contracting coronavirus, then they can’t spend money at those casinos anymore. It sounds cold that it comes down to dollars and cents for most businesses, but it’s often financial incentives that keep people safe – casinos definitely don’t want their paying customers to not be able to spend money anymore. And of course, casinos are always considering bad PR: If just one casino chain had stayed open while everyone else was closing, and that place became a hot zone for COVID, they could easily experience a long-term boycott, which is something they don’t want either. So, before the government even steps in, casinos are out there making their own decisions about what’s best for themselves, and ultimately, what’s best for their customers, too.
But, of course, as we all know, the government steps in anyway. And governments aren’t really all that concerned about the financial health of businesses as much as they’re concerned about getting votes. Governments have different incentives: They don’t have to worry about profit margins (and basic financial solvency) like casinos do, so governments can be much more cavalier about shut-downs. In a nutshell, if a shut-down will make a government look good, and earn votes for politicians because of the perception of safety, you know they’re gonna do it. On the flip side, of course, if it looks like a government is over-reacting, and they’ll lose votes, then they won’t shut down a thing. With that being said, if you look back on all the hysteria surrounding COVID-19 back in March, the government’s decision to shut everything down made sense for them, given their political incentives: People were freaking out, and whether government needed to or not (remember, most of the major casinos had already voluntarily shut down on their own, for the reasons detailed above), they could ride the wave of the hysteria, shut almost everything down, put tens of thousands (even millions) of people out of work, reap the goodwill of future votes, and keep all of their jobs without losing a penny – for them, it was win-win.
But is that still the case? Are things still so bad with coronavirus that the goodwill would remain if government shuts things down again now? And from the casinos’ perspective, are as many people likely to get sick and/or die if they don’t do another voluntary shut-down soon? For governments, it’s all about hype (scared people will vote for anything that makes them feel safe), and for casinos, it’s all about the financials (sick and dead people can’t spend money, and COVID outbreak zones scare others away). So, which way will it go? For me, it’s just too close to call, and I was already wrong once. I guess if I was ever offered the opportunity to place a bet on one side or the other, I probably wouldn’t take that bet at all this time. What about you?