Fortunately, the standard deviation for revenue per customer per visit for gaming is quite large, unlike nearly all other businesses dependent upon direct customer interaction in large numbers. A small number of key customers, sometimes referred to as “whales” in the old casino vernacular, generate a disproportionately large amount of gaming revenue. As a result, a reduction in capacity by 50 percent does not have to automatically mean a reduction in revenue by 50 percent. In addition, casinos do a large percentage of their total revenue in certain short periods of time, generally weekend and holiday evenings. For much of the week and the vast majority of the hours they are open, they are nowhere near 50 percent capacity, much less full. Both of these characteristics mitigate to a degree the impact of reduced capacity on the gaming floor. However, they are less helpful for ancillary facilities at Indian casinos, which have increased in importance dramatically over the past 20 years. Our 2020 survey of Indian casino hotels found a total of 213 Indian casinos with hotels, some with multiple properties, and an average of 259 rooms per Indian casino with a hotel for a total of 55,266 rooms at the end of 2019, as published in the May issue of “Indian Gaming Magazine.” Nearly 94 percent of those properties offer meeting space, nearly one-third have golf courses, nearly one-third have spas, almost one-quarter have waterparks or significant water recreation amenities greater than a simple pool area, roughly 40 percent have arcades, 87 percent have gift shops, over 12 percent have bowling, nearly five percent have movie theaters and over 12 percent have supervised childcare. These figures do not include Indian casinos that have such facilities but do not have hotels. All of these, and many other types of ancillary facilities and amenities will be affected by the change in business volume of their host casinos and by differences in reopening timing and long-term operational changes due to their individual business profiles. Changes in operating procedures and their impacts on employee productivity and customer satisfaction are far form the only issues the Indian gaming industry will face as it struggles to recover. The general economic downturn, jobs losses, general reductions in tourism, loss of consumer confidence, potential increases in savings rates, potential changes in labor and other costs and other factors referenced in the discussion of the general economic prognosis will affect casinos as well. A particularly disturbing correlation is the fact that COVID-19 most heavily affects precisely the most important customer demographic for Indian casinos, those age 65 and older, many of whom have serious health conditions. This demographic will be the last to have restrictions, or at least recommendations for reduced travel, removed and is the most likely to permanently change behavior due to health concerns. To the extent that the senior demographic is disproportionately affected in the long-term due to actual loss of life, lingering restrictions, changes in personal behavior, economic concerns and other factors, Indian casinos will also be disproportionately affected in their demand base beyond other tourism and customer point-of-sale industries.
∴ PROGNOSIS
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