S.O.S.: Las Vegas and the Deteriorating State of Nevada

I'll start by pointing out four things:

1. After closing for two weeks, Macau casinos reopened Feb. 20 with mandatory facemasks for guests and casino employees alike.

2. After seeing a rash of new COVID-19 cases, Macau wasn't even open a month before banning foreign visitors in March. Meanwhile, travel restrictions -- including a restriction on visa issuances from mainland China under the Individual Visit Scheme (IVS), and three-way mandatory 14-day quarantines between Macau, Hong Kong, and mainland China -- caused visitor volumes to Macau to drop 99% in both May and June.

3. Macau has had a total of 46 COVID-19 cases and zero deaths, and has been virtually COVID-free for months. The casinos remain open, if barely so.

4. Nevada casinos were initially slated to open in perhaps Phase 3 or 4.

It's a very simple concept: If you have a healthy population and you don't allow infected tourists to visit, then you can't spread a virus.

And yet somehow, casinos in Nevada managed to open on June 4 as part of Phase 2, without mandatory facemasks for guests, and -- just as importantly, if not more so -- without any restrictions whatsoever regarding where visitors could come from, and under what conditions. We talked about why and how this happened last time (See Las Vegas Strip: Why Is It Open Right Now?), and the importance of visitor restrictions and border controls back in May (See Las Vegas Strip: On Border Controls and the Subsistence Strategy). I recommend reading those if you haven't already, as we won't rehash those discussions here.

But as such, what had started as a stellar virus response in Nevada with the closure of the casinos in March has quickly devolved into a disaster.

Now let me preface what comes next by saying that if there is a way to contain the novel coronavirus while keeping casinos open in Nevada, then that would be the optimal approach. Again, the problem isn't necessarily that casinos are open, but rather the complete lack of control over who is entering Nevada and thus entering the casinos.

Perhaps we'll discuss what the optimal approach might entail next time. But right now, we need to talk about the current situation in Las Vegas, because it is increasingly dire, and for all the wrong reasons.

Nevada COVID-19 response timeline: Closure to re-opening (3/15 – 6/3)

Source: Statistics derived from The Nevada Independent COVID data

Outbreak: Las Vegas casino re-opening

On May 12, Los Angeles County Public Health Director Barbara Ferrer caused a stir when she said that stay-at-home orders would "with all certainty" remain in place on some level through the summer. While the statement caused some confusion as to what that would ultimately mean for residents in LA County for the summer, what was not confusing was the implication: Las Vegas' biggest source market was not healthy enough to come off lockdown. And yet, just weeks later, casinos in Nevada opened June 4 without any visitor restrictions whatsoever.

You get the point: An LA County population that was not healthy enough to escape stay-at-home orders in Los Angeles apparently was somehow perfectly healthy enough to come to Las Vegas.

On June 24, facing a surging COVID-19 case count not even three weeks after casinos reopened, Nevada Governor Steve Sisolak issued a mandatory face covering policy requiring face coverings to be worn in any public space throughout the state, including by visitors in casinos. But by that point, it was already too late -- by June 24, Nevada had the highest coronavirus transmission rate in the country. It had set daily case records three times in the previous eight days, and the daily test positivity rate crossed the 10% WHO-recommended threshold.

Moreover, Bill Welch, CEO of the Nevada Hospital Association, had told The Nevada Independent in a June 12 interview that the hospitals would need to "re-group and reevaluate" if the total number of hospitalizations passed 400. Well, hospitalizations blew past 400 on June 23 and stood at 467 on June 24, a level Nevada has not seen since.

The reality is that the facemask mandate was at best a half-measure designed to buy casinos a couple of weeks to keep them open through the Fourth of July weekend. While facemasks should have been mandated from the start and do reduce transmissions, the reality is that facemasks are not a complete defense against a mass influx of untested visitors concentrated on a four-mile Strip.

Again, the underlying problem, as it has been from the start, has been the lack of visitor restrictions -- you can't spread a virus here if our local population is healthy and if nobody who comes here has it.

So, if virus containment was the priority, the move would have been to close the casinos and hit the reset button.

That same day, New York, New Jersey, and Connecticut issued travel advisories that would require people from states with high coronavirus rates to quarantine for 14 days. The criteria were seven-day average infection rates of 10 per 100,000 residents, or seven-day average test positivity rates above 10%. The initial list included eight states -- Alabama, Arkansas, Arizona, Florida, North Carolina, South Carolina, Utah, and Texas. But by the end of the day, Nevada met the threshold criteria for states with a seven-day average test positivity rate above 10%.

The quarantine would effectively deter visitors from New York, New Jersey, and Connecticut from visiting Nevada by requiring a 14-day quarantine on the return trip home.

Nevada COVID-19 response timeline: Re-opening to facemasks (6/4 – 6/24)

Source: Statistics derived from The Nevada Independent COVID data

Spin job begins: The first death and the Fourth of July

On June 26, Caesars Entertainment (CZR) reported the death of Adolfo Fernandez, a 51-year-old porter at Caesars Palace. That was the first publicly disclosed death of a Strip casino employee, and the last publicly disclosed COVID-19 case on the Strip. Other reports of cases among casino employees on the Strip persisted, and on June 29, the Culinary Union filed a lawsuit against three Strip casino operators "regarding hazardous working conditions" related to COVID-19.

Things only got worse from there.

On Friday, June 26 -- in a dramatic reversal of policy -- Florida Governor Ron DeSantis (R) ordered bars to close as cases surged to record levels. That same day, Texas Governor Greg Abbott (R) similarly ordered bars to close and restaurants to reduce to 50% capacity.

On June 28, California Governor Gavin Newsom (D) ordered bars and nightspots that don't serve food in seven counties to close as cases began to spike. The next day, Arizona Governor Doug Ducey (R) -- in another dramatic reversal of policy -- ordered all bars, gyms, movie theaters, and water parks in the state to close as the state continued to set daily COVID records. The day after that, on June 30, Colorado Governor Jared Polis (D) ordered bars and nightclubs in Colorado to close.

And so, in a span of three days, Las Vegas' two biggest drive-in markets (California and Arizona) and two of its four partners in the Western States Pact (California and Colorado) had closed bars, to go along with Florida and Texas.

Meanwhile, on June 30, New York, New Jersey, and Connecticut officially added eight states to their travel advisories, officially including Nevada on the list of trouble states.

Las Vegas remained open to visitors from all of these states without qualification.

While the rest of the country was shutting down bars and beaches to avoid a July 4th weekend pop, Las Vegas stayed wide open, with some Strip casinos reportedly at over 70% occupancy for the weekend, and at least one downtown casino hotel at 90% occupancy. The thing about the latter figures is that gaming floors are supposed to be limited to 50% occupancy, but as far as I can tell, nobody is counting bodies on the casino floor. And if the hotel is at 90% occupancy and nobody is counting bodies on the casino floor, you can bet the occupancy level on the casino floor is probably above 50%.

Venetian occupancy for this weekend pic.twitter.com/AsZudlgwB0

— Las Vegas Locally 🌴 (@LasVegasLocally) July 4, 2020

Source: Twitter @LasVegasLocally

After setting a daily case record with 480 cases on June 23, Nevada put up 1,000-case days on June 27 and July 3.

On July 6, the city of Chicago implemented a mandatory 14-day self-quarantine for visitors from 15 high-risk states, including Nevada.

On July 7, in a sign of the direction the Nevada virus containment response was headed, Caleb Cage -- Nevada's COVID-19 response director -- said in a press call that ICU and ventilator numbers had been "pretty stable." For the record, COVID-related ICU bed and ventilator use had more than doubled in the previous two weeks.

At this point, Nevada was spiking; its two biggest drive-in source markets were spiking; and much of the rest of the country was spiking. Again, Nevada remained vulnerable to all of these populations.

The only thing that couldn't be done at this point was nothing.

As conditions continued to worsen, with cases and hospitalizations continuing to set new records, on July 8 Governor Sisolak called the Nevada Legislature for a special session -- not to address the public health crisis, but rather to address the $1.2 billion state budget shortfall caused by COVID-19. That day, Sisolak told The Nevada Independent in an interview that bars, pools, and water parks had been a "big, big problem" with regard to mask-wearing and social-distancing directives, as well as gyms and some dine-in restaurants.

No mention of casinos.

The next day, something finally happened: Nellis Air Force Base moved from Phase 3 back to Phase 2, noting that "Southern Nevada has recently seen a sustained increase in the number of positive COVID-19 cases."

Fresh out of excuses, Sisolak called a press conference that evening. Citing advice from federal representatives that something needed to be done, Sisolak announced that bars would close (and nothing else) in seven of the state's 17 counties, including Clark County. Though he didn't say it, this would include bartop gaming machines in the many gaming taverns in those counties, and also bars in casinos.

This was not the move that needed to be made, though as we'll discuss in a bit, it was a much stronger move than it looked on paper. Two days later, Las Vegas Sands announced that it would stop taking mid-week reservations at Palazzo beginning July 21.

Las Vegas was considered an early front-runner to serve as one of the two hub cities for the NHL playoff restart. But by the beginning of July, it appeared the NHL was ready to move in a different direction as cases spiked in Las Vegas. On July 10, the NHL officially selected Edmonton and Toronto as the two hub cities. NHL deputy commissioner Bill Daly noted that Las Vegas was excluded from contention specifically due to "the fact that the COVID rate was spiking outside of what would have been the bubble."

"We certainly had that conversation with the Vegas people," Daly said.

On July 13, California Gov. Newsom ordered the closure of all bars and indoor restaurants in California as the state continued to set new records.

That same day, Hawaii delayed by one month the start of a program that would allow visitors from the mainland to bypass its 14-day mandatory quarantine with a negative COVID test within 72 hours prior to their arrival in the state, due to the surge in cases on the mainland. Not only were visitors deemed too dangerous to visit even with a negative test (in large part related to increasing delays in the turnaround times of test results and the increasing difficulty in getting tested at all due to the rise in cases), but the surge in cases on the mainland was apparently also causing a shortage in test capacity in Hawaii.

Originally slated to begin Aug. 1, the program would be delayed at least until Sept. 1.

By mid-July, the returns from the Fourth of July weekend started to kick in. On July 14, hospitalizations in Nevada passed the 1,000 mark, where they have stayed since.

"We believe that many of the new cases in this recent surge are coming from the Fourth of July weekend," said Caleb Cage, the Nevada COVID-19 response director.

That day, the Nevada Hospital Association announced that it would change the way COVID-19 hospitalization data is obtained and reported, per changes announced on July 13 by the U.S. Department of Health and Human Services.

Nevada COVID-19 response timeline: Fourth of July (6/25 – 7/15)

Source: Statistics derived from The Nevada Independent COVID data

Spin job: Record cases/hospitalizations/deaths, data play, and outbreak non-response

On July 16, the seven-day average daily case figure passed 1,000 for the first time. That day, a document prepared for the White House Coronavirus Task Force and dated July 14, but not publicized, was published by the Center for Public Integrity. The report placed 18 states in the "red zone" for having more than 100 cases per 100,000 over the previous week, and 10 states in the "red zone" for having a test positivity rate above 10%; Nevada made both lists.

One Nevada county -- Clark County -- was listed in the red zone, and six others (including Washoe County, where Reno is located, and also Carson City) in the yellow zone. Among the recommendations for counties in the red zone:

• Limit social gatherings to 10 people or fewer
• Close bars and gyms

At this point, the problem is this: There aren't many moves left for the governor to make. There's no pretending that closing gyms, dine-in restaurants, and pools alone is going to solve all of our problems. And the governor cannot justify closing gyms, pools, and dine-in restaurants without also closing the casinos.

Therefore, all of these things stay open, for better or (more likely) for worse.

Meanwhile, casinos by default make limiting social gatherings to 10 people or fewer impossible. Even in Sweden -- the most oft-cited example used for keeping economies wide open -- the four state-owned casinos in the country closed in March due to a ban on public gatherings of more than 50 people. Those casinos are still closed.

On July 22, Nevada set a new record with 31 deaths, 26 of them in Clark County. The death trend line continues to climb.

On July 23, while discussing "upgrades" to the Nevada DHHS reporting system, state officials said they weren't sure if the spike associated with the Fourth of July weekend was canceling out the benefits of the June 24 mask mandate. State COVID-19 response director Caleb Cage emphasized that the spike in deaths over the previous two days was related to infections that happened five weeks prior (i.e., prior to the mask mandate).

Put differently, this is them trying to pretend that whether there actually is a July 4th spike is ambiguous, and that the jury is still out on whether a mask mandate alone will solve all of our problems. Moreover, pointing out that deaths were attributable to cases that occurred five weeks prior is hardly reassuring when cases and hospitalizations have jumped considerably, portending trouble for death tolls over the next five weeks.

For the record, since the mask mandate announcement on June 24, cases tripled and hospitalizations were up 2.5 times. Here are the seven-day daily case averages and actual hospitalizations for June 24 and July 23:

Source: Statistics derived from The Nevada Independent COVID data

That day, University Medical Center was asking members of the public without COVID-19 symptoms or exposure to a confirmed case not to make an appointment at one of their large drive-thru testing sites, as state testing data indicated that labs were hitting their maximum testing capacity. In other words, the state might simply not be able to handle even counting new positive cases. Meanwhile, test result turnaround times were in some cases pushing past a week, rendering the results mostly useless.

On July 24, Cage noted that there was "some indication" that the daily positivity rate and confirmed cases had stabilized a "little bit," and that there was "potentially" some evidence to support that the mask mandate was working. Again, however, cases had tripled and hospitalizations were up 2.5 times since the mask mandate, as the mass influx of untested visitors from COVID hotspots defeated the masks.

On Sunday, July 26, the state COVID-19 dashboard declined to publish hospitalization data, saying for the first time ever: "Hospitalization data are not updated on Sundays."

So to recap, in the previous week:

1. The state stopped reporting hospitalizations on Sundays.
2. The state maxed out testing capacity and thus could not count any more positive cases.
3. UMC told people to stop showing up for testing.
4. The state pretended it couldn't tell if there was actually a Fourth of July spike, or whether the facemask mandate alone would be enough to solve all of our problems.

On Monday, July 27, Governor Sisolak finally spoke. It was clear what he was waiting for -- the reported R_t figure (representing the coronavirus transmission rate, with figures above one indicating increasing transmissions) to drop below 1.0 (keeping in mind the above machinations), something he referenced:

Ok, so now we know what the governor was waiting for -- for whatever happened in the past week (the reduced testing, etc) to get the *reported* Rt number down under 1.00.

Here's the bad news/good news, bad news first. (Thread) pic.twitter.com/TTGIxWDmzM

— Jeff Hwang (@RivalSchoolX) July 28, 2020

Source: rt.live

Sisolak allowed bars in three rural counties to reopen, while the bar closures remained in Clark, Washoe, Elko, and Nye counties -- thusly, buying more time for the casinos to stay open.

On July 28, the Consumer Technology Association (CTA) announced that CES 2021 -- typically one of the biggest conventions of the year in Las Vegas -- will be going all-digital, and not be held in Las Vegas due to the pandemic.

That same day, Las Vegas Sands CEO Sheldon Adelson wrote a letter to employees committing to keep, pay, and maintain benefits through at least Oct. 31, while the rest of the industry is going through the process of layoffs. While it is tempting to applaud what on the one hand may be a noble gesture, this is not good news in the way we'd all like it to be. The reality is that this is a move that speaks to who holds the power in Nevada -- likely for the same reasons casinos opened in Phase 2 without facemasks or visitor restrictions -- and to the inclination to keep casinos open almost no matter how many people die.

By Monday, Aug. 3, Nevada's R_t figure had jumped back to 1.09, back among the top 10 highest transmission rates in the U.S. That day, the state reported only 2,201 new tests. With 994 new cases per data from The Nevada Independent, that would put the daily test positivity rate at 45.2% -- the state declined to report this number on its dashboard, citing it as "unreliable due to reporting issues." On the state's noon call that day, state officials suggested changing the way the daily positivity rate is calculated:

The state's website just doesn't list this number, saying it is "unreliable due to reporting issues." We'll get more information on today's daily COVID-19 call, I'm guessing. pic.twitter.com/dGWP7AjaTs

— Megan Messerly (@meganmesserly) Aug. 3, 2020

Source: Nevada DHHS

In the updated calculations, it turns out the Nevada Rt never actually dropped below 1.0. https://t.co/ct5Sehulnl pic.twitter.com/lDWSDajZAe

— Jeff Hwang (@RivalSchoolX) Aug. 5, 2020

Source: rt.live

In a press conference Monday evening, Governor Sisolak revealed a new, more targeted approach to reopening the state. Otherwise, nothing changed.

Here's what he said on the topic of whether he would consider closing casinos again: "All of our options remain open. If we identify that is the major problem, that's where infections are coming from, we would have to take appropriate action. Is it the casino or the pools of the casino? Is it the restaurant or is it the gaming area?"

Which, by the way, is not a valid response -- it's just another way of saying nothing will happen anytime soon. Again, the problem is not any one area of the casino or even necessarily casinos themselves, but rather the people coming into them.

On Tuesday, the state changed the way it calculates the daily test positivity rate it chooses to report, now on a five-day time lag and using positive tests as a function of tests administered, as opposed to taking the number of people who have tested positive as a function of the number of people tested.

The obvious goal is to present a lower number for the sake of presenting a lower number, for the sake of appearance and circumventing other screens -- for example, a "red zone" designation or 14-day quarantine policies based on test positivity rate. If we're looking for accuracy, our best bet is to ignore whatever number the state wants to present and continue calculating positivity rates using prior methods, which worked just fine when test positivity rates were in the low single-digits in May.

Nevada COVID-19 response timeline: Post-July 4th spin job (7/16 – 8/4)

Source: Statistics derived from The Nevada Independent COVID data

Closing thoughts: S.O.S.

The bottom line is this: Until Las Vegas is safe, people will not come back here in the way that we'd like.

A couple of weeks ago, longtime gaming industry executive Richard Schuetz -- whose career in the industry spans decades and many roles in many locales -- wrote a piece in GGB News about Stanley Ho, the Macau gaming mogul who recently passed away. Ho was not only a giant in the industry, but also a giant in the Macau community -- someone who stepped in and took care of the community even in situations where the government failed. As Schuetz pointed out, Las Vegas does not at present have a Stanley Ho -- or even a Wynn or a Binion -- a real leader with skin in Las Vegas. As a consequence, those of us who work and live in Las Vegas are at the mercy of corporate casino operators and politicians.

To be fair, Governor Sisolak is in a difficult position on the one hand. On the other hand, our government has more or less abandoned us -- there is no longer a virus response, and we are essentially on our own.

What's troubling is the lack of leadership. If there was an argument that justified keeping casinos wide open like this (i.e., We are at war with the virus; the casinos are our main economic engine that keeps people employed, and we need to focus our efforts there as a community), then that is the case that the governor should be presenting. Instead, we are wasting time playing with the data, and pretending the July 4th spike isn't what it is.

Instead of trying to pretend everything is okay and that Las Vegas is a safe place to visit, why don't we actually just make the effort to make Las Vegas the safest destination on the planet?

The reality is that we are all still guessing a little bit.

Many of us have friends going to bars (with food), parties, downtown, and to the Strip with different levels of care because these things are open, and because we don't all look at things the same way. Some of these people are people we cannot simply choose to avoid. And the reason this continues to happen is because the governor cannot tell us not to do these things while simultaneously keeping the casinos open to visitors from elsewhere.

The reality is that Nevada has largely flown under the radar thus far because our population is small and because much of our impact is hidden. Our numbers only reflect the damage that visitors leave behind, and not what happens when visitors go home and wreak havoc on their local communities. The reality is that the Nevada coronavirus response will be examined and ridiculed mercilessly in the coming weeks, months, and years, as cases upon cases continue to be traced back to Las Vegas.

The most important topic -- visitor restrictions -- is the one topic that the powers that be simply don't want to talk about. And it is not because visitor restrictions are irrelevant or ineffective or out of left field -- the casino operators know first-hand the importance of the topic from their own experience in Macau and Singapore. Rather, the powers that be don't want to talk about it because they simply do not want to talk about it. Instead, they're choosing to endlessly point at facemasks as the be-all, end-all solution, when facemasks alone are quite plainly not a complete defense against a mass influx of untested bodies from unhealthy places.

We need to be able to test visitors before they enter Nevada.

And until we are able to screen visitors, nothing here will change -- even if we do get this situation under control, we will just continue to experience outbreaks over and over again, until some point after an effective vaccine becomes widely available.

The good news is that people have started to stop coming on their own. On July 4, according to J.P. Morgan analyst Joseph Greff, an estimated 550,000 visitors came to Las Vegas. A week later, that number dropped to 400,000, and then a week after that, the estimated visitor count dropped to 350,000 as cases continued to rise.

Moreover, as I said earlier, that the governor did close bars is a bigger move than it looks on paper. The basic rule in Casino Market Analysis 101 is that the bigger the casino, the bigger the draw; the more casinos in a cluster, the bigger the draw; and the more and better the non-gaming amenities -- bars, restaurants, nightlife, entertainment, hotels, movie theaters, bowling alleys, etc. -- the bigger the draw.

The reverse is also true. When you take away the conventions, the shows, and now the bars, you are taking away some of the biggest reasons to come here, and are thusly reducing visitation. Hence some of the potential delays in casino openings we are seeing (Tropicana, Mirage, Park MGM).

I'll close with a couple of messages.

First, for those of us who live in Las Vegas, the reality is that our government has virtually abandoned us. There's not a whole lot we can do at this point other than to look out for ourselves, and hope people stay away from Las Vegas long enough for us to get things under control here.

And for everybody else who doesn't live here: Give us a break. I'm not going to tell you not to come here -- if you're determined to come to Las Vegas during a raging pandemic, it wouldn't make a lick of a difference anyway. But if you must, at least come during the week when nobody else is around and you can have the run of the place to yourself.