Detroit casinos may not begin fully operating for a year, mayor says

The future of casinos hangs in the balance
Posted at 3:33 PM, May 06, 2020
and last updated 2020-05-06 19:46:45-04

DETROIT (WXYZ) — Until there is a COVID-19 vaccine, casinos in the city of Detroit will likely not fully re-open, according to Mayor Mike Duggan.

"I think we’re a long way away — six months or a year —  from seeing it operate the way it used to," Duggan said Wednesday at his daily press conference, following up on statements he made to the Detroit News' Nolan Finley Tuesday with regards to the city's gaming future.

RELATED: MGM Grand Detroit expects long-term layoffs due to COVID-19 crisis; 2,632 employees affected

"It costs us $600,000 a day," he continued. "I haven’t complained about it a single day because the health of the community is more important than revenue coming in."

In 2019, the city brought in $184 million in wagering taxes and development fees from the three casinos — nearly 20 percent of the city’s general fund.

To soften the blow, the city is turning to it's rainy day fund of $107 million. Additionally on Tuesday, City Council approved cuts to workforce, transit and blight-elimination spending, amounting in $348 million in savings.

This sort of budget shuffle is happening across the country, according to Michael Pollock, the managing director of Spectrum Gaming Group, a non-partisan research and analytic firm.

"There is an obvious sense that because most casinos are getting zero revenue at this point in time, it puts enormous pressure on the operators, the employees, as well as on state and local governments," he said. "Enormous pressure."

While the economic pressure is obvious, Pollock brings up one major unknown. Even if casinos did safely re-open, would people go?

"The real unknown is going to be what is the demand going to be," he said. "There will be a small element of the gaming public — maybe a large element of the gaming public — that may not return until they feel confident to a point that a vaccine would take them."

In the interim, Pollock said some states are considering tax relief for the gaming industry. While he concedes this may seem counter intuitive — especially when tax revenue is already being lost — it could help ensure success down the line.

"It may take some combination of factors including tax relief to return that normal time," he said.

The casinos have been closed since March 15.

Greektown, which is owned by Penn National Gaming Inc., said it had to place a large majority of its employees on furlough April 1, but will continue giving health benefits thru June.

MGM Detroit is providing two weeks of pay for its furloughed full-time employees and part-time hourly employees, and maintaining health benefits thru August for those on its "MGM Resort" health plan. The company also has an emergency grant fund with over $12.5 million.

"MGM Detroit looks forward to continuing to work with state and city government and health officials to implement a phased reopening at the appropriate time and in a manner that is consistent with Federal, state and local guidance," Jocelyn Kelly a spokesperson with MGM Resorts wrote in a statement Wednesday.

Motor City Casino, owned by Marian Ilitch provided the following statement:

"We look forward to reopening MotorCity Casino and welcoming back our employees and guests in a safe and secure manner. An extensive and comprehensive reopening plan is being developed, which incorporates CDC, city, county and state guidelines. We remain in regular contact with city, state and gaming officials, and look forward to their continued direction, guidance and assistance."