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Why MGM Resorts Is Falling Today

By Rich Duprey – Jul 27, 2020 at 3:24PM

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Getting its casinos back up to speed is proving more intractable than originally thought.

What happened

Shares of MGM Resorts (MGM 0.77%) were falling over 6% in afternoon trading Monday after Las Vegas casinos notified their staff that if they weren't recalled from furlough by August 31, they would subsequently be fired.

So what

Major employers are required under the federal Worker Adjustment and Retraining Notification Act (WARN Act) to notify their workers when there are expected to be mass firings. MGM Resorts, Wynn Resorts, Tropicana, and other casino operators sent out such notifications.

Las Vegas parking garage sign

Image source: Getty Images.

Now what

MGM told its employees that it had originally hoped the casino closures would be brief and full operations could be restored. But the pandemic has progressed, and based on currently available data, it doesn't look like "it will be safe to restart shows prior to August 31, 2020."

That means the "large majority" of employees in the entertainment and sports division will be fired on that date. Health benefits will also be terminated on that date, though employees who are let go will be able to still apply for emergency grants from the casino through Nov. 29, 2020.

Shares of Las Vegas Sands, MGM, and Wynn were all down today, though MGM was hardest hit.

Rich Duprey has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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