Casinos are still reeling from being shut down during the early days of the pandemic, facing gaping holes in revenue streams and an anemic recovery due to continued capacity limitations. COVID-19 has forced gambling companies to change forever out of necessity to stay afloat, which isn’t necessarily a bad thing.
COVID-19 resulted in unprecedented chaos within the gambling industry. Major companies have had to change their business model and in some cases, surrender struggling operations. Likewise, Caesars Entertainment Inc. was forced to sell some of its underperforming casinos and that could be a trend that will continue for the foreseeable future.
Monday morning featured news that Pfizer has completed tests of a vaccine that shows over a 90% effective rate for COVID-19. This is major news for the entire country. According to the report, the pharmaceutical giant is preparing to seek emergency authorization from the FDA once volunteers have been monitored for two months of getting the vaccine. Pfizer has said that by the end of November the vaccine could be ready for use across the country.
The positive news trickled into the stock market as well. By midday on Monday, the Dow Jones Industrial Average was up nearly 5%. The gain of over 1,300 points is the biggest since March 24 when it gained 2,112 points.
COVID-19 Vaccine Optimism Makes Stock Market Explode
We’ve seen the struggle gambling companies have been through over the past nine months play out in a number of ways. We saw Caesars Entertainment get bought out by Eldorado Resorts just last year, and even Las Vegas Sands Corp. is discussing potentially selling off massive casino resort locations like the Venetian.
Gambling companies are ready for a COVID-19 vaccine and so are investors. The potential to “return to normalcy” seemed very real on Monday. Likewise, the stock market reflected that optimism throughout the trading day.
Top Casino Stock Increases On Monday
Wynn Resorts Inc (NSDQ: WYNN) 📈 27.65%
MGM Resorts International (NSDQ: MGM) 📈 16%
Caesars Entertainment Inc. (NSDQ: CZR)📈. 13.95%
Las Vegas Sands Corp. (NSDQ: LVS) 📈 11.48%
Penn National Gaming Inc. (NSDQ: PENN) 📈 12%
The major obstacle that gambling companies are facing since the COVID-19 shutdown has been limited capacities for retail locations. With casinos limited to half capacity or even 25%, the race has been on to change the way they bring in revenue. With this reality, DraftKings has seen huge valuations in the stock market while not owning a single land-based casino. Their only focus is on a mobile environment that can even help them gain eyeballs through revenue deals with media companies.
As recently as Oct. 16, DraftKings announced a deal with Turner Media to become the exclusive odds provider for Bleacher Report. Turner Sports Vice President Will Funk told CNBC that sports betting, and DraftKings, in particular, would play a “key role in driving viewership” to the sites.
When Worlds Collide: Are Gambling And Tech Destined To Come Together?
Through this challenging year, some companies have come out in better shape than when they went in. Penn National Gaming Inc. started the year hovering around $25 per share. They dropped significantly in March like many other gambling companies. However, PENN has been able to adjust by launching the Barstool Sportsbook in Pennsylvania and with launches in Michigan and Colorado on the horizon. The mobile component is something PENN severely lacked coming into this year and will continue to grow as the years pass by.
In addition to PENN, Caesars Entertainment agreed to purchase William Hill Sportsbook in September. Following the report of a $3.4 billion buyout, Caesars Entertainment sold Tropicana Evansville along with Bally’s Atlantic City. Caesars clearly sees the value in the mobile betting market and is beginning to focus on its major retail-based locations rather than a diluted market that has underperformed in recent years.
Casino companies are continuing their transformation into tech companies, and the market is reacting positively.