The MGM Grand Detroit confirmed that 1,100 of the casino’s previously furloughed workers will be laid off Monday.
The job losses are among 18,000 cuts that MGM Resorts International will make across its U.S. properties due to a business slowdown caused by the COVID-19 pandemic. Those 18,000 positions represent more than 25% of MGM’s pre-coronavirus workforce in the United States. In Detroit, the layoffs will affect 39% of the 2,800 workers employed at the MGM Grand prior to the international health crisis.
“It has been nearly six months since we temporarily closed all our U.S. properties due to COVID-19 and were forced to furlough nearly our entire domestic workforce,” wrote Bill Hornbuckle, MGM International’s president and CEO, in a company-wide memo that accompanied the announcement. “While we have safely resumed operations at many of our properties and have returned tens of thousands of our colleagues to work, our industry — and country — continues to be impacted by the pandemic, and we have not returned to full operating capacity.”
Difficult time for Detroit casinos
In Detroit, the MGM Grand, MotorCity Casino Hotel, and Greektown Casino-Hotel were all ordered closed, along with other non-essential businesses, on March 16. An executive order by Gov. Gretchen Whitmer permitted them to reopen beginning Aug. 5 at 15% operating capacity and following strict health and safety guidelines. The city’s casinos reported zero revenue during the four-and-a-half month shutdown, and combined revenue at all three casinos was down 65% through July, compared to the first seven months of 2019.
MGM Grand Detroit reported $126.5 million in revenue through July, down $240.3 million from the $366.8 million reported over the same span last year. The casino hired back 1,200 of its furloughed workers when it reopened on Aug. 7, but despite Hornbuckle’s memo emphasizing MGM’s desire to continue rehiring “as our reopening plan progresses, regulatory restrictions are lifted, business demand grows and our operations expand and require additional support” Monday’s layoffs will dampen remaining employees’ hopes of returning to the casino in the near future.
According to the memo, laid off employees will retain their health care through September 30 and remain on MGM’s recall list as the company looks to bring them back based on business need, position, and seniority. Workers who are rehired before 2022 will retain their seniority and be immediately eligible for the same benefits they were receiving before the job cuts.Message from Bill Hornbuckle - 8.28.20
Analyst: Grim outlook for retail casinos; mobile gaming could accelerate job losses
Because of the 15% capacity limit on Michigan’s commercial casinos — the lowest in the nation — the MGM Grand Detroit may be more likely to recall employees than MGM properties in other states that are already operating at 50% capacity. “If the demand is there and capacity limitations increase, it is reasonable to assume some of the displaced employees may be called back to work,” said Alex Calderone, managing director of Calderone Advisory Group, a financial consulting firm in Birmingham, Mich. “A lot will depend on the health of the consumer and whether there is strong demand for brick-and-mortar gaming.”
Even if Detroit’s current capacity restrictions provide some room for future job growth, though, Calderone said the worst is yet to come and more layoffs could follow at the MotorCity and Greektown casinos. “MGM isn’t the first to announce layoffs and certainly won’t be the last,” he said. “These layoffs are the result of business interruption caused by a once-in-a-hundred-years global pandemic. It’s tough to see a scenario where the other two properties aren’t forced to make similar cuts.”
According to Calderone, the problems aren’t limited to Detroit and will be felt throughout the retail gaming industry. “Coronavirus is pure kryptonite to the casino business,” he said. “Even if it is relatively safe to gamble right now, it’s not nearly as much fun as it used to be. Masks, barriers, and distancing — while necessary — all serve to kill the fun of a night out at the casino. Why Wall Street hasn’t punished the sector more is beyond my comprehension. The ship has been approaching the iceberg for six months now and investors don’t seem to care nearly as much as they should.”
In Michigan, the expected launch of mobile sports betting and online casino gaming in late 2020 or early 2021 has been heralded as a potential savior for commercial and tribal casinos, the online gambling platforms they’ve partnered with, and the state, city, and tribal budget shortfalls caused by plummeting wagering-tax revenues. The stakeholders who won’t benefit from legal online gambling, however, are the brick-and-mortar casino workers whose jobs depend on customers visiting sportsbooks and playing slots and table games in person.
“While online gaming revenues will likely continue to rise as brick-and-mortar casinos suffer, one must ask where all of that is likely to leave the displaced employees,” Calderone said. “You don’t need dealers, security guards, cage managers, and slot technicians to run an online casino — so some of these jobs are likely to permanently disappear, absent an effective treatment for the virus in the near future.
“If online gaming is rolled out later this year, we could see some gamers substitute their in-person experiences for online gaming,” Calderone went on. “That probably would result in fewer employees being called back to work.”
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