Casino operator MGM Resorts is laying off 18k staff as the US land-based gambling market struggles to regain its pre-pandemic form.
On Friday, MGM CEO Bill Horbuckle issued a memo to staff advising them on what most of them already knew: “our industry – and country – continues to be impacted by the pandemic, and we have not returned to full operating capacity.”
The specific cuts won’t be detailed until Monday, the official ‘date of separation’ under federal law for staff not recalled to work after six months’ furlough. Investors apparently liked what they heard, as MGM’s shares are currently trading up around 5% from Thursday’s closing price.
Hornbuckle informed staff that the company would continue to pay health care benefits to affected staff until the end of September. Laid-off staff who are recalled will retain their seniority, although it remains to be seen what level of customer activity would have to be reached before any recall notices would be issued.
Earlier this month, the estate of MGM founder Kirk Kerkorian donated $2m to a fund set up to economically support furloughed staff. The MGM Resorts Foundation had by that point provided over $11m to its staff through this fund.
MGM warned last month that a “large majority” of its entertainment and sports division team would likely receive permanent pink slips due to ongoing restrictions on all events involving people assembled in large groups.
MGM has cautiously reopened most of its properties, trying to find a sweet spot between customer demand and operator supply. Two venues – Empire City in New York and Park MGM in Las Vegas – have yet to reopen, the former due to Gov. Andrew Cuomo’s skittishness about doing anything to undo the state’s pandemic mitigation efforts.
In July, Hornbuckle said Park MGM could remain shut for the rest of the year if there was insufficient demand in Vegas. The company re-opened the Mirage on Thursday and Hornbuckle said Thursday that Park MGM could open on October 1 if the Mirage hits its September targets.
Revenue reports from major casino markets such as Nevada and Atlantic City show operators’ fortunes have risen sharply since the end of their COVID-related shutdowns but remain well below monthly averages. Much of the public remains skittish about congregating indoors, while the casinos have been forced to operate with significantly reduced capacity (50% in Nevada, 15% in Detroit).
In other MGM news, the BetMGM sports betting/online gambling joint venture with GVC Holdings announced Friday that it had reached a deal Evolution Gaming to supply live casino services to all BetMGM-affiliated US-facing brands. The relationship will start in New Jersey, with Pennsylvania and Michigan next on the to-do list.