Michigan’s casinos remain closed. Unemployment freezes are leaving some workers desperate
Michigan businesses are beginning to open as the state relaxes some of the restrictions issued during the COVID-19 pandemic. Though restaurants, retailers and salons can reopen with some restrictions, one of Detroit’s major industries remains shuttered: casinos.
Detroit’s three casinos collectively employ thousands of workers and provide hundreds of millions of tax dollars to Michigan and Detroit. But the dice, cards and chips have been locked away since March 16. Some workers have struggled with unemployment, and there are concerns that the drop in wagering taxes, Detroit’s third-largest revenue source, could create a major budget problem.
“When you’re talking about a loss of a half a million dollars a day, it’s very, very challenging to plug that gap and to fill that hole,” said Alex Calderone, managing director of Calderone Advisory Group and a turnaround specialist with expertise in the casino industry.
Temporarily laid-off casino workers are among the 2.2 million Michiganders who have filed new jobless claims since mid-March. Most of those who have filed claims have been receiving unemployment benefits, but others have had theirs frozen as part of a fraud investigation affecting hundreds of thousands of people.
Robin Ryan has worked as a poker dealer for more than 20 years. She received a letter last month from Michigan’s Unemployment Insurance Agency (UIA) asking her to verify her identity. On Wednesday she received benefits for the first time in weeks, when she said she received two weeks’ worth of checks of the eight she is owed.
“There were days that I called over 200 times in one day and couldn’t get through,” Ryan told CBS News last week about her efforts to restore payment.
Ryan says she’s fallen behind on her bills and had to decide between buying food and medicine. She also had cut back on food for her dog and cat at times, saying last week, “I have to eat, too.”
“That was downright bad,” Ryan said Wednesday. “I had barely any food. I mean there were three days I ate like a tomato and an apple the whole day because I didn’t have nothing. I had no money whatsoever. That was terrible.”
Majid Jackson, a 28-year-old table games dealer, hasn’t received an unemployment check in several weeks. He was getting benefits during April, but he, too, received the state’s letter in May asking him to verify his identity, which he says he responded to immediately.
“Here we are this fourth week of no income and it’s starting to wear a little thin,” Jackson told CBS News last week. He has three young children and a wife who is also out of work because of the pandemic and has had trouble getting unemployment benefits.
Jackson said he had to withdraw about $4,000 from his 401(k), which helped pay for a new car after he got into an accident in May. He also recently helped his mother pay her rent. Jackson says he was saving up to buy a home, but feels a bit like he has to start over.
“It’s definitely stressful,” he said.
Ryan and Jackson are among the hundreds of thousands of Michiganders whose unemployment accounts were frozen while the state investigates suspected cases of fraud after the U.S. Secret Service issued an alert about criminals trying to take advantage of unemployment programs. Michigan’s labor department has added hundreds of employees to work on the problem.
As of June 12, a state task force said it had resolved over 140,000 cases, but another 400,000 cases of suspected fraud are being investigated. People whose benefits were frozen as part of the investigation but were receiving them legitimately, will eventually receive the money they’re owed.
“We have work to do, there’s no question,” Governor Gretchen Whitmer said at a press conference Wednesday, acknowledging the high number of claims in the state. “We will continue working until everyone who’s eligible gets the resources for which they are eligible.”
Meanwhile, Michigan’s tribal casinos were able to open and gambling capital Nevada has opened gaming floors. Michigan was hit hard by coronavirus, with more than 60,000 cases and over 6,000 deaths, but the situation has improved in recent weeks. Opening casinos presents a major public health challenge.
Last week, the Michigan Gaming Control Board released guidelines for how casinos operate when they open. The requirements include limiting capacity to 15%, temperature screening at entrances, requiring customers to wear masks and banning smoking on casino floors.
There are some mixed feelings among employees about reopening the casinos. William Cook, a slot technician, who just received benefits for the first time in several weeks, would rather be working.
“Let me go back to work, let me take the risk,” Cook told CBS News last week, adding that there are risks in everyday life. “The sooner the better.”
Ryan and Jackson are concerned about safety because they have underlying health issues. But Ryan, who has lupus, said her financial situation may require her to work.
“I’m thinking since my unemployment is so iffy that I would have to go back because I’d lose my unemployment and my insurance,” Ryan said Wednesday. “But when it’s time, when they do call me, I may change my mind.”
Jackson has some reservations. While he, too, feels the economic pressure to get back, he worries about his asthma and chronic bronchitis.
“I know that the coronavirus does attack your lungs so that’s just something I don’t really want to risk,” Jackson said. But he added, “Once (unemployment benefits) stopped, it’s like, you know, what are you going to do? What am I supposed to do?”
A letter obtained by Crain’s Detroit shows that Detroit’s chief public health officer signed off on a plan to reopen the casinos several weeks ago. A spokesperson for Whitmer says casinos will return during Phase 5 of the state’s reopening plan. Parts of Michigan are in that phase and the governor has said the rest of the state is likely to move to Phase 5 before July 4.
MGM Grand Detroit is working with government and health officials on reopening safely. Representatives for MotorCity Casino and Greektown Casino did not respond to requests for comment. The Detroit News reported on Tuesday that permanent layoffs at Greektown would begin in September.
Casino closures have strained Detroit’s budget. A report from February found casino taxes were expected to account for 17% of the city’s general fund revenue for the 2020 fiscal year.
Through May, there has been a 51% drop in wagering taxes, a tax on casinos’ net winnings, for Detroit compared to the first five months of 2019. In April, Detroit estimated wagering taxes through the 20201 fiscal year would be $112 million less than officials projected in February.
Detroit projected a $348 million dollar revenue shortfall in April through the 2021 fiscal year due to COVID-19. The city is dipping into its rainy day fund to close the gap, cutting the budget and reducing hours for city staff. Detroit chief financial officer David Massaron told the Detroit Free Press last month that the city will have a balanced budget for the new fiscal year starting July 1.
Even when the casinos reopen, it’ll be a challenge to make money, Calderone said. The casinos are used to earning large shares of their revenue after sporting events and on weekend nights, when people pack inside.
“In an environment where capacity is constrained…to occupancy levels of 15%, it is a mathematical impossibility for these properties to generate pre-coronavirus tax revenues,” Calderone said.