Many of the current problems and the early issues surrounding reopening will reduce in severity over time, especially if an effective vaccine can be found that can be administered to all age groups and health conditions. Current steps to alter operations and enact safety protocols are all ad hoc and hurriedly developed and implemented. Clearly a long-term solution to greater spacing is not simply keeping half of the machines on the floor turned off. Ultimately, gaming floors and other areas in casinos will be redesigned to incorporate greater spacing in a manner that is more attractive to the customer, more conducive to efficient operations and ultimately capable of actually enhancing customer and employee experiences rather than hindering them. In the same way, foodservice, lodging, other amenities, player loyalty programs, air handling systems and many other facets will evolve in new ways over time. More specific ways this is likely to occur will be discussed in the Prescription section of this report. Here they are mentioned briefly as part of the considerations into the prognosis of Indian gaming recovery. For the same reason that casinos are less seriously affected by gaming floor capacity changes, they are also capable of greater flexibility in expanding space to accommodate full demand capacity rather than simply reducing capacity due to physical space limits. In the short-term a cancellation or at least postponement of new construction at Indian casinos is inevitable due to lost income and uncertainty over future economic conditions. However, new construction and renovation is equally certain to experience a period of more rapid growth than would otherwise have occurred once the recovery period is underway in earnest and to do so in two phases. The first phase will be a combination of a resumption of certain key and well supported projects that were postponed due to the crisis but otherwise continue to make sense, along with a significant uptick in internal renovation efforts to turn temporary, unattractive and inefficient spacing changes into permanent, more attractive and more efficient design. The second phase, which will overlap the first to some degree, will involve new expansions of space with new design templates in use to enable the actual capacity of gaming machines and table games, traditional or electronic, to fully capitalize on available demand without distancing constraints. Even at $500 to $1000 per square foot, the revenue produced by a slot machine with typical utilization would pay for the space increase in 24 months, even less in high demand locations. The speed with which the second phase will occur will depend upon the risk profiles of individual operators and the success of the early ad hoc reopening efforts. Because new construction takes time, the earlier planning for new construction begins, the earlier its benefits can start putting increased profits back into tribal coffers. While the impact of the crisis on gaming revenue and the period of recovery will extend through 2022 in our analysis, as described below, an opening of a major new expansion or renovation by 2023 would require initiating planning still this year. Of course, there is a risk that recovery could take longer or that initial renovation or expansion plans will need to be adjusted as more information becomes available. For that reason, more conservative tribes will likely wait somewhat longer to begin the process. However, we anticipate that some more aggressive tribes will begin the long-range planning process sooner rather than later.
∴ PROGNOSIS
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