OPERATING IN A COVID-19 ENVIRONMENT FROM SHUT DOWN TO REOPENING: INDUSTRY INSIGHTS

Abstract

Gaming Law ReviewVol. 24, No. 8 ArticlesFree AccessOPERATING IN A COVID-19 ENVIRONMENT FROM SHUT DOWN TO REOPENING: INDUSTRY INSIGHTSModerator: Becky Harris, Participants: Ellen Whittemore, Virginia Valentine, Jan Jones Blackhurst, and Sandra Douglass MorganModerator: Becky HarrisBecky Harris is the Distinguished Fellow in Gaming and Leadership with the University of Nevada, Las Vegas (UNLV) International Gaming Institute (IGI) in Las Vegas, Nevada.Search for more papers by this author, Participants: Ellen WhittemoreEllen Whittemore is general counsel at Wynn Resorts Limited in Las Vegas, Nevada.Search for more papers by this author, Virginia ValentineVirginia Valentine is president and CEO at the Nevada Resort Association in Las Vegas, Nevada.Search for more papers by this author, Jan Jones BlackhurstJan Jones Blackhurst is a board member at Caesars Entertainment Corporation in Las Vegas, Nevada.Search for more papers by this author, and Sandra Douglass MorganSandra Douglass Morgan is chair of the Nevada Gaming Control Board in Las Vegas, Nevada.Search for more papers by this authorPublished Online:19 Oct 2020https://doi.org/10.1089/glr2.2020.24812AboutSectionsPDF/EPUB Permissions & CitationsPermissionsDownload CitationsTrack CitationsAdd to favorites Back To Publication ShareShare onFacebookTwitterLinked InRedditEmail As the new year was ushered in, the outlook was cautiously optimistic with the Wall Street Journal reporting, “economists were broadly upbeat for 2020.”1 Confident, the National Retail Federation (NRF), “expect[ed] steady growth going forward.2 With the U.S. now more than 10 years in the recovery phase from the great recession and enjoying the longest, though weakest, economic expansion on record,3 the NRF seemed to be tempting fate when it predicted that “economies do not run out of steam and a big event is needed to knock down a $20 trillion economy. Recessions often correct for imbalances in the economy, but none appear to be evident.”4 As confirmed reports of the spread of coronavirus (COVID-19) outside of China began to grow, the world still had no idea just how stealthy and tenacious COVID-19 is. Indeed, just 23 short days later, the U.S. declared a public health emergency.5 As talk of declaring a global pandemic began to grow and governments throughout the world began to issue shutdown and shelter-in-place orders, Nevada, like virtually everywhere else in the world, could not escape the wrath of the invisible virus that brought the world to a standstill.6Never before had every casino in Nevada been ordered closed,7 but in an unprecedented move, the governor of Nevada ordered that “… all gaming devices, machines, tables, games, and any equipment related to gaming activity shall cease operations effective March 17, 2020, at 11:59 p.m. … ” in an attempt to stop the spread of COVID-19. Not since the John F. Kennedy's funeral had Nevada casinos closed their doors and even then it was just the casinos in Las Vegas.8How does an entire industry oriented to large social groupings of people navigate a new era of social distancing, public health concerns, unprecedented uncertainty, and shutdowns where more questions than answers linger? Our panel today, Ellen Whittemore (EW), General Counsel, Wynn Resorts Limited; Virginia Valentine (VV), President and CEO, Nevada Resort Association; Jan Jones Blackhurst (JJB), Board Member, Caesars Entertainment; and Sandra Douglass Morgan (SDM), Chair, Nevada Gaming Control Board [the Board], are gaming industry pioneers who helped to shepherd the industry through the challenges of closure and the pitfalls of reopening the multibillion-dollar gaming industry in Nevada.BECKY HARRIS (BH): Wynn Resorts (Wynn) was one of the first gaming companies to experience a shut-down when the Macau government shuttered gaming operations in early February 2020 because of concerns about the spread of COVID-19. How did Wynn's experience in Macau prepare it and other gaming companies for impending regulatory changes in Boston and Las Vegas?ELLEN WHITTEMORE (EW): When COVID-19 first appeared in the Greater Bay Area of the People's Republic of China (PRC), the government of Macau took immediate steps to mitigate the spread. At first, it required temperature screening of all employees and guests and required that all guests and employees wear masks. In early February, the chief executive officer of Macau required all casinos to be closed for 15 days. In anticipation of both closing and reopening, our Macau properties spent significant time drafting safety protocols and processes (guest communication, employee communication, operational checklists, asset protection checklists, etc.) that were very useful in developing plans for our U.S. casinos.Once it became clear that it was the appropriate decision to close our Nevada and Massachusetts casinos to limit the spread of the virus, we requested to close in Massachusetts and publicly announced our intent to close our property in Las Vegas before closure orders were imminent. We, along with our fellow Nevada operators who also have operations in Macau, encouraged others in Las Vegas to accept that closing our properties for a period of time to stop the spread was the appropriate decision for the long-term health of the industry and in Nevada, the lifeblood of its economy.While we were closed, we continued to work with our health experts and our CEO Matt Maddox coordinated and encouraged meetings between the CEOs of the major gaming companies and CEOs of our local hospitals (both in Nevada and in Massachusetts) to communicate the current situation in Nevada and develop an avenue for communication with each other. We continued to review the scientific information coming out of the PRC and Macau and that continued to enhance our deliberative process.And because we were proponents of closing the properties, our CEO Matt Maddox felt it appropriate to compensate our employees while the casinos were closed. We paid all of our almost 18,000 U.S. employees their full wages, plus tips for our entire closure. One of the very positive results of making sure our employees were paid was that they had the opportunity to continue to help others. Our humanitarian efforts, from making and delivering meals to the homeless and economically disadvantaged, to virtual volunteering, continued throughout the closure. Our wonderful employees gave back in the most trying of circumstances.We also learned from Macau's reopening experience that it was possible to reopen with stringent safety protocols in place and once we became satisfied that the spread had been contained, we encouraged the reopening of the resorts in Nevada and Massachusetts under very strict health and safety guidelines that we developed in conjunction with the health experts we had retained.BH: As head of the Nevada Resort Association, a gaming industry trade association, you are in a unique position to speak to the conditions your members faced when the historic shutdown of Nevada's land-based casinos became imminent. What were some of their concerns? How did your members engage with regulators to find solutions? Describe some of the challenges your members were able to overcome.VIRGINIA VALENTINE (VV): It's striking to look back to March now, nearly six months later, and think about the incredible speed of events and all the aspects of the business that needed to be addressed very quickly amid a constantly changing environment. I know “unprecedented” has become cliché, but it still best captures what everyone would have once considered inconceivable—the complete shutdown of the Las Vegas Strip and every resort hotel in the state.The issues our members were confronted with covered an enormous gamut. First, and foremost, was safety. How are we going to protect our employees and our guests? What health and safety protocols work best? What do we do with someone who is ill? Very little was known about the virus at that time which generated question after question. Close and constant communication was critical. We were having daily calls with the local health districts, the hospitals and county emergency management, and, of course, were working very closely with gaming regulators. Nevada Gaming Control Board Chairwoman Morgan and Members Johnson and Katsaros made themselves available at all hours to provide guidance as we worked through early mitigation measures and then closure procedures. Those open lines of communication made a tremendous difference.In addition, we were fortunate that several of our members had valuable early experience with casino closures in Macau which gave them insight on actions we all needed to take to contain the virus for the health and safety of our employees, guests, and fellow residents. They shared those best practices with their peers in the industry. That was invaluable. We went into the closure knowing it was the right thing to do. Some of our members had already announced they were voluntarily shutting down. Based on what happened in Macau, we went into this thinking it would be couple of weeks, maybe a month.Closing was a monumental undertaking, and it had an emotional toll as members had to send hundreds of thousands of employees home. Beyond health and safety issues, there were things that Nevada operators never had to consider, like properly locking doors that didn't have locks because they were never closed before. We worked closely with the Board on protocols for drops and count rooms and how to secure and account for cash, chips, and credit and bankroll requirements. There were all kinds of audit, compliance, and reporting measures to ensure accountability. Member Johnson provided a lot of direction in this area and helped us walk our members through the expectations.In addition, gaming regulations, state law, and county ordinances have certain requirements and definitions of resort-hotels regarding what is needed to be in operation … things like a 24-hour restaurant, room service, having a certain number of rooms in operation, among other items. The Board understood the situation and provided us with flexibility to stay in compliance and protect the integrity of the industry. There were a whole range of issues we worked through with them.BH: Wynn operates in three distinct regulatory environments, Boston, Las Vegas, and Macau. One of the first things Wynn Resorts did in Nevada was to create and then publicize a comprehensive health and safety plan for the gaming industry. What were some of the similarities in the approaches you experienced when working with the regulators from these three jurisdictions? What were the differences? Can you give a few examples of how Wynn worked with regulators to get approval for its plan?EW: All jurisdictions wrestled with the appropriate response to the pandemic at the time it hit their jurisdiction. Macau was very proactive in closing and then later restricting visitation. In both Nevada and Massachusetts, Wynn was a vocal proponent of closing the casinos to stop or slow the spread of the virus. We believed, based upon the advice we received from preeminent health experts, that asking our employees to stay home was the appropriate public health response.Certainly, the process for reopening was different in each jurisdiction. Nevada has approximately 300 nonrestricted casino locations. It would have been impossible for the Nevada Gaming authorities to adopt procedures that would have been applicable to those varied properties. Instead, they established certain immutable requirements and mandated that each licensee develop their own policies for submission to Gaming Control Board which each licensee was then required to follow. Massachusetts was able to consult with each of its licensees and adopt more exacting procedures applicable to the three casinos in that state. But in both states, we worked with our regulators through a transparent process of communication and thoughtful deliberation by them.We did not envy the regulators or the governments making difficult decisions. We recognized that one of difficult aspects of coming to the right conclusions as to what was appropriate for the health and safety of our employees and guests was the ever-evolving nature of the knowledge we had regarding the disease. We also recognized that in a state like Nevada, with our very economy tied to the tourism industry, the decision of Governor Sisolak to close our casinos was one that would have serious economic implications. In that context, we applaud the regulators who had to balance a myriad of considerations in coming to the conclusions that they felt best for each of the jurisdictions in which we operate.BH: Being on the board of a publicly traded gaming company that operates in numerous jurisdictions in the U.S. and abroad, perhaps you can provide a sense of how the response to the COVID-19 global pandemic has required regulation changes in jurisdictions in which Caesars operates. Specifically, what new considerations for gaming operations have been brought to light as public health concerns are addressed? How have day-to-day operations changed? What is Caesars doing to address customer concerns? Employee concerns? What innovative thinking and/or approaches are being pursued?JAN JONES BLACKHURST (JJB): With the onset of COVID-19 the world of gaming changed instantly and dramatically from both a board governance and regulatory perspective. Immediately, the focus changed from return on investment and shareholder value, to a broader environmental, social, and governance (ESG) perspective inclusive of our entire community, from employees and patrons to our investors. A collaborative partnership was immediately formed with regulators and the gaming industry in each of our gaming jurisdictions.While the rules were not entirely consistent, the overriding goal was safety for our stakeholders in the broadest sense. The Caesars board immediately supported each government call to close our properties and worked with management to investigate the most stringent safety protocols to implement upon reopening. The Caesars board also approved a multitude of support programs for our employees including paid leave, health care continuation, and foundation support. The ability to provide this additional support was augmented by the donation of our board salaries.Caesars was the first company to require masks at all times in our property, even before the governor's mandate. I think COVID-19, in many ways, brought out the best in our board members and in the gaming industry more broadly. Collectively, we were all looking to do the right thing and set the highest possible standards.BH: How has the regulatory environment changed because of the COVID-19 global pandemic?SANDRA DOUGLASS MORGAN (SDM): It hasn't changed—it's grown. In his Directive(s), Governor Sisolak trusted the Board to ensure that Nevadans and the state's visitors are kept safe while enjoying what various gaming operators have to offer. Due to the gaming industry's importance to the Nevada economy, I am on several weekly calls with health professionals, emergency managers, and policymakers who provide information on COVID-19 testing, contact tracing, data trends, PPE supply, etc., to ensure that Nevada is prepared and that we will not reach a point to overburden our health care system. The Board still enforces each gaming regulation just as it had before the temporary closure of the industry—but we are now also tasked with implementing and enforcing policies to mitigate the spread of a deadly virus. It's not the first time the Board has been tasked with protecting the public—this time it's just in a new way. I'm incredibly proud of the way the Board's employees have stepped up to fill this new role.BH: The Nevada Resort Association boasts around 70 members that are scattered throughout Nevada. In addition to Las Vegas strip properties, your membership also includes neighborhood, destination, and downtown Las Vegas and Reno casino operators. How do the challenges differ for each type of casino operation? What are some of the unique challenges each type of property has had to overcome?VV: Our members are diverse in their operations, locations, and clientele, but at the core, they share the same fundamentals as an industry and were, for the most part, facing the same set of issues in this situation. As I mentioned, health and safety was paramount regardless of what type of operation, and everyone was focused on ensuring that the most effective protocols and practices were in place.That said, there are a few differences between our members in Northern and Southern Nevada. The volume of visitors and the type of visitors are different. Southern Nevada hosts millions of guests from all over the world, which made procedures more complex given the larger scale. Almost half the visitors to Las Vegas fly in while Northern Nevada has a robust drive-in market. Travel bans and restrictions have had a far larger impact on Southern Nevada, so we maintain close contact with the management of McCarran International Airport. In Las Vegas, we worked closely with the Southern Nevada Health District, University Medical Center, and Clark County to include contingency plans for guests that might not be able to travel home. Southern Nevada is the meetings and conventions capital, so developing standards to safely host large gatherings and trade shows is an ongoing effort. Lastly, while the guidance from the Gaming Control Board is consistent across the state, there are variations between local ordinances and regulations. We've been assisting members with navigating and clarifying local requirements by working with cities, counties, and health districts.BH: As it traverses the COVID-19 landscape, the state of Michigan has taken an “intelligent risk-based” approach to enforcement matters.9 The state of Illinois has described its approach as a mutual cooperative dialogue [with gaming operators] in which the regulator is attempting to be pragmatic and reasonable.10 How would you describe Nevada's approach to COVID-19, public health concerns, and gaming enforcement matters?SDM: Nevada's legislative and executive leaders have always recognized the need for an independent and apolitical body to strictly regulate the gaming industry. The Board will continue to strictly regulate Nevada's gaming industry in order to protect the public health, safety, and general welfare of all Nevadans, as required by state statute.I would describe the Board's approach with regard to enforcement of COVID-19 Health and Safety Policies and the Governor's Directives as reasonable and with a strong focus on compliance. The Board understood that it was imperative to have a thoughtful and measured reopening of Nevada's gaming industry because all of the work that Nevadans have done to fight the spread of this viral pandemic will have been for naught. In crafting its health and safety policies, the Board relied on the medical leadership provided by Nevada's public health leaders, including infectious disease physicians at University Medical Center, Renown Health, the Southern Nevada Health District, and the Washoe County District Health Officer. These medical experts have informed the Board on how to safely allow the heartbeat of Nevada's economy to start pumping again.Prior to reopening, the Board issued two policy memos that outlined how some of the regulatory requirements and timelines related to temporary closures, bankroll, and audit procedures would temporarily change in order to help operators reopen more efficiently. The Board has been in consistent communication with gaming licensees regarding mitigation measures and a variety of proposed methods that would allow gaming to resume.BH: As gaming operators looked to the June 4, 2020, reopening how did your members address regulator concerns? Customer concerns? Employee concerns?VV: It all comes back to health and safety. As most people know, the governor tapped Chairwoman Morgan early on in the pandemic to be a point person and help ensure Nevada remained the gold standard for the industry. She did an excellent job, providing leadership and guidance and was always accessible. She was laser-focused on protecting the integrity of the industry, knowing that Nevada needed to have strong regulations with the highest standards and strict enforcement and accountability. And, our members understood that the key to consumer confidence and the recovery of the industry centered on ensuring a safe and secure environment.Reopening Nevada's largest industry was a collaborative process with the Board and many state and local agencies working closely with our members to ensure all the critical components were in place for a safe reopening. As most know, all gaming licensees had to submit reopening plans to regulators. Our members spent those 78 days we were closed talking to national medical experts, leading researchers and scientists, and public health officials to meticulously refine their already robust health and safety plans and protocols. Our members made adjustments to their operations in accordance to the procedures the Board outlined in their April and May policy memorandums to address regulators' concerns on health and safety measures for employees and guests as well as the bankroll requirements, internal controls, and various required filings.Again, I'll point to the accessibility to the Board and the level of communication between us. We all understood how important it was to get the health and safety standards right and we had one shot to open safely and correctly given all eyes would be on Nevada. We had regular calls with the Board going through the requirements, making sure we were checking all the boxes.BH: When news of the global scale of COVID-19 broke, Caesars and Eldorado were in the middle of a complex merger. Though all parties continued to be optimistic that the merger would be consummated, and it was on July 20, 2020, many had hoped the transaction would be completed much earlier in the year. What was it like trying to complete such a large and complicated business transaction while facing an uncertain economic future? How were Caesars and Eldorado able to effectively navigate such difficult terrain left in the wake of a global pandemic?JJB: The merger of Eldorado (ERI) and Caesars was accomplished against huge headwinds and against all odds. Watching the ERI senior team and the chair of the Board's Strategy Committee (Don Kornstein) working together to keep financing in place, increase debt financing for liquidity to sustain the company until the industry could “normalize,” maintain their focus and commitment to the transaction, while the stock market was “crashing” (ERI's stock fell from $70 to $7) was a lesson in how excellent management operates.I found tremendous confidence in the future of this new company as I observed true executive leadership operate in a crisis. It also became apparent that this new company would be better positioned together for long-term survival during the COVID-19 pandemic. The combination of the two companies gave us a huge gaming footprint in multiple markets and a robust customer database from our combined loyalty programs that successfully returned revenues to near normal in local casino markets, and gave us volume (although limited) in our larger destination resorts. The ERI management philosophy of decentralized decision making and significantly reduced corporate overhead was already in transition when COVID-19 hit, so we were able to rightsize the business much more expeditiously.The new Caesars has adopted the best of both companies, a more efficient operating team, gifted executive leadership, and a commitment to the highest standards of integrity and corporate social responsibility. I have been with Caesars Entertainment for most of my executive career and the new company is the best iteration of what makes Caesars the most important brand in the gaming industry.BH: As the regulator, how are you working with the gaming industry to overcome the challenges of the COVID-19 global pandemic?SDM: During the first two weeks of June, the Board recognized that this was unchartered territory and consistently provided licensees with feedback regarding the Board's expectations. Now that gaming in Nevada has resumed for almost three months, we expect strict compliance with regard to face coverings and social distancing.BH: In what ways does the gaming industry continue to work with regulators to address difficulties that have arisen since the reopening?VV: We're all focused on staying open, operating safely and helping Nevada's economy recover and bringing people back to work. I keep coming back to this … because it's been so critically important … communication with regulators is the key to keeping things on track. The guidelines continue to evolve as more is learned about the virus. As the requirements change, we're in contact with the Board on the items that need clarity to ensure we're meeting expectations and make any course corrections.We appreciate that the Board and local and state officials continue to make themselves available to us to resolve misunderstandings about the expectations for the enforcement. Gaming regulators have toured properties to better understand how the policies are implemented and how adjustments make the intent of the measures more practical. They've alerted us to issues that need to be addressed which have helped us improve our operations. We recognize compliance and enforcement are crucial to Nevada remaining the gold standard and the industry embraces that. It's essential that visitors know and see how seriously we take their well-being.We continue to address the challenges social media creates. For example, when an older, pre-pandemic photo is posted to Twitter, Instagram, or Facebook showing people without masks and close together, it generates complaint calls. Then an agent comes out to investigate and finds that's not what's really happening. And, there are cases where a guest posts something that paints a picture that doesn't capture the whole story, or unfortunately, it's the one time a property had an issue and that goes virtual without showing how quickly the situation was corrected. We continue to work through this so the Board's resources are focused appropriately.We've also worked with the Board on the bar and lounge closures and how that impacts bar top play and food and beverage operations. We're currently working proactively with the Board to identify how we can safely bring back meetings and conventions when the governor determines gatherings can resume. There's been a real spirit of “we're all in this together” which has been very helpful and is strengthening Nevada's reputation as global leader in gaming and hospitality and gaming regulations.BH: As you are aware, there are a variety of tools regulators can use to achieve compliance. What are some of the tools the Nevada Gaming Control Board is using? What have been some of your most effective approaches? In terms of enforcement, what is important in the big picture?SDM: The Board hasn't changed its approach to enforcement—statute requires the strict regulation of the industry. The Board has been tasked with enforcing rules that aren't germane to gaming, but that doesn't change how the Board approaches enforcement. What's important in the big picture? The health and safety of the residents of this state and its visitors. Long before this pandemic took hold around the world, the Nevada Legislature made it the state's policy that the public health, safety, and welfare of Nevadans is paramount. The pandemic hasn't changed that—it's just brought it into clearer focus.BH: As the world continues to trek through uncertain terrain in the wake of the global pandemic, the gaming industry can take comfort in the leadership exhibited by our exceptional panelists. They have been steadfast in confronting unending challenges, protecting public health, consummating complex transactions, innovating as they find ways to balance the regulatory necessities with continued gaming operations, and most importantly finding productive ways to work together. The interaction and collaborative synergy in overcoming significant obstacles exhibited by these extraordinary women is impressive. Today's discussion highlights the ability of female leaders to forge a path forward, not only in the the gaming industry, but also the world!1 Harriet Torry, WSJ Survey: U.S., China Agreement Will Boost Growth, Wall St. J. (Jan. 16, 2020, 10 AM ET), https://www.wsj.com/articles/wsj-survey-u-s-china-agreement-will-boost-growth-11579186801 (accessed Aug. 21, 2020).2 Monthly Economic Review: January 2020, National Retail Federation (Jan. 8, 2020), https://nrf.com/research/monthly-economic-review-january-2020 (accessed Aug. 21, 2020).3 Id.4 Id.5 Grace Hauck, Karl Gelles, Veronica Bravo, and Mitchell Thorson, Five Months In: A Timeline of How COVID-19 Has Unfolded in the US, USA Today (June 23, 2020), https://www.usatoday.com/in-depth/news/nation/2020/04/21/coronavirus-updates-how-covid-19-unfolded-u-s-timeline/2990956001/ (accessed Aug. 21, 2020).6 Ted Anthony, Invisible Virus, Invisible Fear: How to Navigate the Unseen?, AP News (Apr. 27, 2020), https://apnews.com/e4e17c01b216bda73ee5735efa69eb54 (accessed Aug. 21, 2020).7 Associated Press, Coronavirus Forces Las Vegas Strip to Shut Down for First Time Since JFK Assassination, Market Watch (Mar. 18, 2020 10:57 AM ET), https://www.marketwatch.com/story/coronavirus-forces-las-vegas-strip-to-shut-down-for-first-time-since-jfk-assassination-2020-03-18 (accessed Aug. 21, 2020).8 Id.9 Matt Carey, Regulators Discuss More Collaborative Enforcement as Casinos Reopen, Gambling Compliance (August 6, 2020), https://gamblingcompliance.com/premium-content/insights_analysis/regulators-discuss-more-collaborative-enforcement-process-casinos (visited September 18, 2020). A copy of the article is on file with the moderator.10 Id.FiguresReferencesRelatedDetails Volume 24Issue 8Oct 2020 InformationCopyright 2020, Mary Ann Liebert, Inc., publishersTo cite this article:Moderator: Becky Harris, Participants: Ellen Whittemore, Virginia Valentine, Jan Jones Blackhurst, and Sandra Douglass Morgan.OPERATING IN A COVID-19 ENVIRONMENT FROM SHUT DOWN TO REOPENING: INDUSTRY INSIGHTS.Gaming Law Review.Oct 2020.542-548.http://doi.org/10.1089/glr2.2020.24812Published in Volume: 24 Issue 8: October 19, 2020Online Ahead of Print:September 28, 2020KeywordsCOVID-19gaming regulationreopeningPDF download