Thousands of casino employees have had their wages and tips washed away by Hurricane Sandy, enduring yet another day out of work as the gambling industry waits to resume operations amid a lengthy shutdown.
One union leader doubts that workers will ever be able to fully recover from going so long without pay.
“It’s gone,” Bob McDevitt, president of Local 54 of UNITE-HERE, said of the lost wages. “There’s no one to go to. They haven’t been out of work long enough for unemployment and the casinos are not going to pay them back.”
Casinos shut down on Sunday as Hurricane Sandy threatened the New Jersey coast. There was no immediate word Wednesday when they might reopen in the storm-ravaged town, according to the New Jersey Division of Gaming Enforcement.
Lisa Spengler, a division spokeswoman, said no decision will be made to reopen until Gov. Chris Christie lifts his mandatory evacuation order and that all safety issues for Atlantic City’s residents and visitors have been addressed.
“We will continue an ongoing dialogue with the casinos to ensure a seamless reopening when it is safe for the city, its residents and visitors,” Spengler said.
McDevitt accused state officials of not being open enough with the public about a possible reopening date.
“It’s a state secret,” he said. “It seems to me like there’s political jockeying going on. People have to plan their lives. People are getting frustrated. I just hope they make the announcement as soon as possible.”
Speculation has begun to build that the shutdown could stretch on for at least several more days. Wall Street credit-ratings agency Moody’s Investors Service warned Wednesday that the casinos “may be closed for an extended period of time” because of the severity of the storm.
“This would result in a meaningful loss of revenue and earnings over the short term, something many casino operators in regions affected by the storm, particularly in Atlantic City, cannot afford,” Moody’s said in a statement.
Gary Loveman, chairman and CEO of Caesars Entertainment Corp., indicated that the shutdown would continue for the foreseeable future. Caesars Entertainment owns the Bally’s, Caesars, Harrah’s Resort and Showboat casinos in Atlantic City.
“We’re optimistic we’ll be able to reopen in the next several days,” Loveman told casino analysts during a conference call Wednesday to discuss the company’s third-quarter earnings.
The Atlantic City market is already mired in a prolonged revenue slump caused by competition from casinos in neighboring states and the sluggish economy. The shutdown is adding to the misery, particularly for the out-of-work casino employees, McDevitt said.
“That’s a huge, huge problem,” he said. “People are living day to day. Housekeepers are going to lose four or five days of pay. Even if they want to come in to work, they can’t.”
McDevitt drew parallels with the three-day casino shutdown in July 2006, which was caused by a state budget crisis. Employees suffered lost wages then and were hit again when Hurricane Irene forced the casinos to close for three days in August 2011.
Local 54 is the casino industry’s largest union, representing about 14,000 housekeepers, bartenders, cocktail servers, cooks and other service workers. McDevitt said the union is studying ways to help soften the shutdown’s blow on union members.
Tony Rodio, president of the Casino Association of New Jersey, an industry trade group, estimates the casinos are collectively losing about $5 million each day in gambling revenue.
The shutdown is costing them not only winnings from their casino operations, but also millions of dollars in revenue from nongambling sources such as hotel rooms, bars, restaurants and retail stores.
Wall Street analyst Andrew Zarnett, of Deutsche Bank, warned of dire financial consequences. He estimates the 12 casinos will generate about $236 million in revenue from their slot machines and table games in October, a 10 percent decline from a year ago.
Even worse, if revenue from the newly opened Revel megaresort is removed from the equation, the results for the 11 casinos that were operating this time last year will be down approximately 25 percent for the month, Zarnett said.
“While a hurricane isn’t an ideal situation for anybody, this is especially bad for Atlantic City, which has been struggling with the negative impact from competition and additional supply in the Northeast,” Zarnett wrote in a note to investors.
Hurricane Irene, which caused the casinos to shut down during the last weekend in August 2011, resulted in an estimated $40 million to $45 million loss in gambling revenue. Irene wiped out a prime, moneymaking summer weekend. In contrast, Hurricane Sandy has disrupted weekday business during the normally slow off-season. For that reason, Sandy may not be nearly as bad as Irene from a financial standpoint.
However, even when the casinos are given the go-ahead to reopen, it is likely to take them a while to ramp up operations. Tom Ballance, president and chief operating officer of Borgata Hotel Casino & Spa, estimated it will take his casino between 12 and 24 hours to get ready after the state gives clearance and the city’s travel ban is lifted.
“We wouldn’t be open full bore like a Saturday night in July,” Ballance said. “We would open with a much smaller staff. We’ll gradually open some restaurants.”
Ballance explained that the biggest challenge will be to get Borgata’s 5,000 employees back to work, a task made difficult by flooded roads and a strained transportation system.
“This is a historic natural disaster,” Ballance said. “Our first and foremost concern is for our team members, customers and families. We have to get employees back to work and get our customers back. That’s really all I’m focused on right now.”
Like the other casinos in town, Borgata emerged largely unscathed by the storm, suffering only minimal damage. However, other parts of the city were pummeled by flooding.
In the meantime, the Division of Gaming Enforcement remains in contact with the Governor’s Office, other state and local officials and the casino industry. When the evacuation order is lifted, the division’s director, David Rebuck, will sign an order allowing each casino to reopen at a specific day and time.
Division investigators and personnel are poised to report to the casinos when they are allowed to do so, the agency said. They will monitor all operational and internal controls during the pre-opening process to ensure the integrity of gambling operations.
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