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Las Vegas: Bubble City

By Jeff Hwang – Updated Oct 6, 2020 at 3:55PM

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MGM and Wynn last week both announced plans to implement rapid COVID testing in what may be a prelude to broad visitor testing that could make Las Vegas one of the safest destinations on the planet.

Face masks can be a complement to other things when other things are safely in place. But to start with having face masks and then think you can crowd your buses or your shopping malls – that's definitely a mistake.

Dr. Anders Tegnell, State Epidemiologist, Public Health Agency of Sweden

Last Tuesday afternoon, Nevada Governor Steve Sisolak (D) announced that the limit on gatherings in Nevada would be raised from 50 people to 250 people (or 50% of capacity, whichever is smaller), allowing for the possibility that shows, meetings and conventions, and nightclubs could return – most notably to the Las Vegas Strip.

Ahead of that announcement, MGM Resorts International (MGM -0.51%) presented a health and safety plan for meetings and conventions that would effectively create mini event bubbles by employing rapid COVID-19 tests that could produce results in under 20 minutes. And then Thursday morning, Wynn Resorts (WYNN 1.32%) CEO Matthew Maddox penned an op-ed in the Nevada Independent announcing plans for Wynn to similarly implement rapid on-site COVID testing to facilitate the return of events; Wynn is partnering with University Medical Center (UMC) to build an on-site testing facility which it hopes to have up and running before Thanksgiving.

MGM Park from the outside

Image Source: Jeff Hwang

The MGM and Wynn plans could fundamentally alter the Nevada coronavirus response by paving the way for a full-fledged (semi) bubble city that could ultimately establish Las Vegas as the safest, most forward-thinking destination on the planet.

But before we go there, let's step back and make sure we properly understand the context of where Las Vegas is at in the grand scheme of things. Because just two weeks ago on September 24, Sweden's Prime Minister Stefan Lofven reiterated his intention to keep Sweden's limit on gatherings of 50 people in place, saying "What we do right now, we will enjoy later. What we do wrong, we will suffer later." Back on March 29, Sweden put the 50-person limit in place (down from 500), which led to the immediate closure of Sweden's four state-owned casinos; those four casinos have remained closed for over six months now.

Though Sweden never had a formal "lockdown" in the strictest sense of the word and has not mandated the use of face masks, Sweden did close universities at the outset of the pandemic, while restricting capacity at restaurants and retail, and thoroughly stressing the importance of maintaining social distancing. There was no downplaying the seriousness of the virus.

And so – in terms of the Western world – if New Zealand and Australia are on the far left of the spectrum in having the strictest lockdown measures and visitor/movement restrictions, and Sweden is on the extreme far right as the champion of being open, then Las Vegas (and the rest of Nevada) has been to the right of Sweden since June, when Nevada reopened casinos despite having the exact same 50-person limit on gatherings. And as we have seen, by opening without mandated face masks initially and without visitor restrictions whatsoever – thus leaving Las Vegas vulnerable by being wide open to visitors from COVID hotspots, including its primary California and Arizona drive-in markets – that reopening came with disastrous results from the outset.

And now, Nevada has moved even further to the right of Sweden by raising the limit on gatherings to 250 in order to allow casino operators to hold events.

That out of the way, to properly understand what this all means; why Las Vegas keeps screwing up its pandemic response; and how we can move forward to get to the place we all want to be – a happy and healthy Las Vegas with an abundance of happy and healthy visitors – the first thing we need to talk about is the Las Vegas visitor and the target market.

If you're new to this party and haven't done so already, check out my previous articles on COVID-era Las Vegas first:

The Las Vegas Visitor and the Target Market: I + P + S

We already know what it takes to keep a large destination casino market open safely: Macau has been open since February, and has had zero COVID deaths and has been virtually COVID-free for months now. Of course, Macau also banned foreign visitors in March, just three weeks after reopening; and with additional visitor restrictions in the form of three-way mandatory 14-day quarantines between Macau, Hong Kong, and mainland China – as well as a temporary halt to visa issuances from mainland China under the Individual Visit Scheme (IVS) which has since been restarted. Visitors to Macau were down 99.5% in May; 99.3% in June; 97.9% in July; and 93.7% in August.

Generally speaking – particularly in the absence of cheap rapid testing capability – there is a trade-off between how open you want your borders to be and how much COVID-related disaster you are willing to accept.

With that in mind, if you listen to casino executives talk about Las Vegas on earnings calls and in other financial settings, the conversation about conditions and the prospect of a rebound in Las Vegas has almost invariably revolved around the need for the return of conventions and shows and the things Las Vegas is missing right now – and basically never about what is required to make Las Vegas safe. Because as I've written many, many, many times now, the latter requires discussing visitor restrictions – the option that the powers-that-be in Las Vegas want to pretend doesn't exist, even as states such as Hawaii, New York, New Jersey, Connecticut, Massachusetts, Maine, and New Mexico all have 14-day quarantines pointed at hotspot states, while even Florida had 14-day quarantines pointed at NY/NJ/CT at the outset of pandemic.

Alaska requires a negative COVID test for non-residents to enter the state at all, while Maine requires a COVID test within 72 hours prior to arrival in order to check in to a hotel while bypassing the quarantine requirement. Visitors to Massachusetts from hotspot states can bypass the mandatory quarantine with a negative COVID test either prior to arrival or during the quarantine period, while visitors to Hawaii from the mainland U.S. will be able to bypass quarantine beginning October 15 with a negative COVID test 72 hours prior to arrival.

As such, the move to raise the limit on gatherings from 50 to 250 people is really about this chart below, where Las Vegas visitor volume was down 70.5% in June; 61% in July; and 57% in August, and where convention attendance in Las Vegas since reopening June 4 has totaled effectively zero (for August, the Las Vegas Convention and Visitors Authority reported the number as N/A, after reporting it as zero for June and July). Visitor volume did rise a bit in August vs. July, but at the cost of a precipitous drop in room rates as the average daily rate (ADR) dropped under $100 (before resort fees!) for the month.


June 2020

July 2020

August 2020

Visitor Volume




Convention Attendance




Total Occupancy













June 2019

July 2019

August 2019

Visitor Volume




Convention Attendance




Total Occupancy












Source: Las Vegas Convention and Visitors Authority (LVCVA)

The problem is, this assumes that the current COVID-era Las Vegas visitor market looks something like this:

Potential Visitors = (Current Visitors + Convention Visitors) x Gravity Factor

The gravity factor representing some synergistic growth in visitation from having more things open and more things to do, thus making Las Vegas a bigger draw. The above, of course, is simultaneously true but also answering the wrong question, as it does not solve the bigger picture issue – that there is a pandemic, to which different visitors have different levels of sensitivity.

Rather, the visitor equation that needs to be solved is this one:

Potential Visitors = (I + P + S) x Capture Rate






Population of potential visitors who are indifferent to the virus for whatever reason (for example, because they may not perceive the virus threat as real), who will largely choose to visit Las Vegas based on what's open or closed (e.g. bars, shows, conventions, etc.). This population is not likely growing.



Population of potential visitors who acknowledge the threat of the virus, but who may be willing to visit Las Vegas depending on perceived conditions. The willing-to-visit portion of this population has likely shrunk since July 4.



Population of potential visitors who are pandemic-aware and will only visit when safety is assured. This population is likely not visiting pretend-safe Las Vegas.

The reality is that there is an entire population of potential visitors that is not coming to pretend-safe Las Vegas at all.

The game is not to pander to population I (the indifferent crowd that largely doesn't think the virus is real and tends to view mask-wearing as a nuisance) and pretend everything is under control in Las Vegas, which is more or less what has happened thus far. Rather, the game is to actually make Las Vegas a safe place to visit in order to be able to capture a bigger portion of population P (the pandemic-aware crowd that started to stop showing up after July 4, as cases and eventually hospitalizations and deaths in Las Vegas surged to record levels) and to be able to market to population S (the safe crowd that has largely stayed away).

Bubble Competition

Let's say you are planning to hold a meeting or convention in Las Vegas, and have not yet determined a location. Let's also say that only MGM and Wynn are set up to provide a safe convention bubble with on-site rapid testing, while nobody else is.

If you're the convention host, it would almost be murderous to pick a location for your convention other than an MGM or Wynn property, as you would quite deliberately be picking a less-safe proposition. And so if it's not apparent already, rapid testing-enabled mini-bubbles for events should quickly become the standard practice on the Las Vegas Strip, and in turn across the industry as cheap, rapid testing capability starts to become more widely available.

Customer safety is a point of competition.

By the same token, Las Vegas as a city needs to establish safety as a competitive advantage over other destinations. The reality is that as rapid testing becomes more widely available, it will not be unique to Las Vegas. As such, Las Vegas cannot be a follower in this regard – not only does Las Vegas need to be the safest destination on the planet, but it needs to get there first, because our very recovery is at stake.

Safety needs to be our brand.

What this means is that testing bubbles in Las Vegas cannot be limited to special events at a limited number of properties. We need to go all the way.


As I've written before, a full Las Vegas recovery is not guaranteed. 

Probably the bleakest and simultaneously most often projected date for a full post-COVID recovery in Las Vegas is 2023. But even 2023 is optimistic – because even if we had handled reopening Las Vegas properly amid the pandemic from the start, we would still likely be staring at a longer recovery timeline than that. The reality is that following the Great Recession, it took five years for Las Vegas visitor volume to reach the 2007 peak of 39.2 million visitors. And as I've mentioned previously, the Las Vegas Strip has yet to actually recover from the Great Recession:

  1. Strip gaming revenue has yet to hit the 2007 peak of $6.49 billion.
  2. In nominal terms, it took seven years for total Strip revenue to pass the 2007 level ($15.8 billion).
  3. In real terms (factoring inflation), since the 2007 peak, total Strip revenue has grown at a pace slower than inflation – in other words, factoring inflation, the Las Vegas Strip hasn't even really recovered from the Great Recession yet.

There are no givens here.

There are mitigating factors that should aid the recovery, including a new stadium (Allegiant Stadium) and NFL football team (the Las Vegas Raiders); a new casino opening October 28 that will change the face of downtown Fremont Street (Circa Las Vegas); an emerging Arts District downtown which will effectively give Las Vegas a third walkable theme park and improve its drawing power; and a new large-scale integrated resort on the Strip slated to open in 2021 (Resorts World Las Vegas), which will greatly expand the usable area of the Strip back toward pre-Stardust-implosion levels.

On the other hand, by way of comparison, Wynn Resorts' Encore opened December 2008 and MGM opened Aria and the City Center project in December 2009, while the Cosmopolitan opened in 2010.

The extra challenge is that Las Vegas needs to overcome not just the pandemic, but also a global financial crisis. The upside is that – despite all of the mistakes Nevada has made in reopening – that the opportunity is still there to do this right and establish safety as a competitive advantage.

Bubble Creation: Shouldering the Responsibility for Safety

Let's say you're a small business owner in a state with no face mask mandate. You want the same thing that everybody else wants – to be open safely – and you want everybody in your store/restaurant/bar/business to wear face masks as a matter of policy because it is the best practice to keep your employees and customers alike safe.

If you're the owner or an employee of this business, the last thing you want to have to do on a daily basis is to tell obnoxious customers that they have to put on a mask or leave, or otherwise risk violence over stupid customers.

And so, if you're the state, it is your duty to shoulder the responsibility and put in place a mandatory face mask policy. You need to take this out of the business owner's hands so that the business owners and their employees can say "Hey, this is state policy, and there's nothing I can do about this."

Likewise, if you're a visitor to Las Vegas, you don't want to show up to Las Vegas and have to say to another visitor "Hey man, put on a mask." It is the responsibility of the casino operator to enforce the use of face masks on their properties so that their customers don't have to. And it is the responsibility of the state to mandate this policy so that it's not the casino operator's policy that rowdy visitors are complaining about – the casino operator may or may not necessarily want to have face masks be a "Caesars policy" or a "Wynn policy", though in the actual case of face masks, pre-merger Caesars Entertainment (CZR) announced that face masks would be mandatory across all of its properties on the morning of June 24 (just prior to Governor Sisolak's announcement later that day that face masks would mandatory in Nevada).

At present, both MGM and Wynn are clearly open to at least some form of visitor restrictions – the act of creating a testing-based event bubble itself is a form of visitor restriction, as you are blocking people who either fail or refuse the screen.

The next level is to require visitors to either show up with a test or to test on-site in order to check in to a Las Vegas hotel. If Las Vegas wants to be ahead of the safety curve, this is where this game needs to go – otherwise, Las Vegas will be playing catch up if (for example) Disney (DIS 0.85%) decides to implement a testing screen to enter Disney World (which would seem more likely than not to occur), and where Maine has already implemented this exact thing, and where Monaco – where casinos reopened June 5 – already requires guests to show up with a negative COVID test in order to check in to a hotel as well. 

It's possible the casino operators will do this on their own as a group by way of competition (similar to Caesars implementing face masks requirements systemwide, and what will likely happen with the rapid testing-enabled event bubbles). But it's less likely a small casino or hotel operator will want to take the risk of being the first to take such a step on their own.

My opinion – as it has been from the start regarding the need for visitor restrictions – is that this policy needs to be implemented by the state of Nevada.

Las Vegas and the Current State of Nevada

Nevada residents unhappy with the "lockdown" sometimes refer to Governor Sisolak as "King Sisolak" – the all-powerful "tyrant" – for ordering the statewide shutdown in March, but the truth is more likely that we actually have the opposite problem here in Nevada. In Macau, the American casino giants will do whatever the government of Macau wants, because they are all operating on gaming concessions set to expire June 2022 (and also because Macau is so much more valuable to them than Las Vegas is). In Nevada, that is not the case.

In Nevada, things happen the way they do because somebody wants it that way, and sometimes to their own detriment.

Casinos in Nevada reopened June 4 – in Phase 2 instead of what was originally supposed to be Phase 3 or Phase 4 (which now don't even exist) – because somebody wanted it that way. We opened without a facemask requirement because somebody wanted it that way. And we opened without visitor restrictions because somebody wanted it that way.

It was not actually in the best interests of the casino operators to open without mandated facemasks and without visitor restrictions, and it certainly was not in the best interests of the residents of Las Vegas. We've already seen the results.

And in case it needs to be said again, the casinos in Sweden have been closed for over six months already.

On Wynn's Q2 earnings call on August 4 – after being one of the last casino operators on the Strip yet to publicly disclose even a single case – CEO Matthew Maddox disclosed that Wynn Resorts had conducted 16,750 tests (not 16,750 different employees) over the preceding months and had detected 300 COVID cases among its Las Vegas employees. In a clever choice of words – likely meant to imply that virtually all of their employees were infected off-property without actually claiming as much – Maddox said Wynn's 10-person contact tracing team found that "99% of those 300 employees were exposed outside of Wynn" (Note the use of the word "exposed" rather than "infected" – for example, if a bunch of employees wind up infected and hang out together outside of work, then they were "exposed outside of Wynn" even if 100% of them were exposed to each other at work, and it might be a coin toss where the transmission actually occurred. And by the way, if 99% of those 300 actually did all get infected off-property, then Las Vegas must just be a scary dangerous place.).

On September 17, Maddox reported that the number of Wynn COVID cases had reached 548. In other words, Wynn Resorts alone has reported more COVID cases than Taiwan (currently 517), which has a population of 23.8 million people.

And Wynn is probably one of the healthier operators on the Strip.

The next day, after much balking, the Southern Nevada Health District (SNHD) finally released a list of places with possible COVID exposures in southern Nevada. Not surprisingly, eight of the top nine locations on the list of possible exposures were Las Vegas Strip casino properties – the other being the Clark County Detention Center – topped by the Cosmopolitan and Bellagio. The Cosmopolitan has apparently been dubbed by some dealers as the "Wuhan of the Strip".

In truth, conditions have improved considerably since our last conversation on August 5. COVID hospitalizations in the state of Nevada peaked at 1,160 on July 31, and had dropped steadily such that hospitalizations have been in the 400-500 range since September 10, as: (a) people started to stop showing up after July 4th (Maddox noted on the Q2 earnings call that reservations at Wynn dropped 25% after the Fourth), and (b) our primary California and Arizona drive-in source markets started to become healthier (as of Sunday, Johns Hopkins University shows California with a 7-day average daily test positivity rate of 2.6% and Arizona at 6.6%), meaning that the visitors that are coming to Las Vegas are also likely healthier and less likely to spread disease, at least for the moment.

However, conditions are still not good by any objective measure.

Sunday, New York City Mayor Bill de Blasio announced a plan to close nonessential businesses, schools and day care centers in nine neighborhoods in Brooklyn and Queens, as the test positivity rate had crept up past 3% over the previous seven days.

Meanwhile, where concerns in New York are mounting over a test positivity rate of 3%, the 7-day average daily test positivity rate in Nevada has almost exclusively been in double digits since June 24. And yet bars in Clark County reopened at 11:59 p.m. on Sunday, September 20, after having been closed since July 10. Bars reopened because somebody wanted it that way, and not necessarily because we were ready for it. Similarly, the reality is that the limit on gatherings was raised to 250 people because somebody wanted conventions and shows and events, and not because Las Vegas is healthy enough to warrant it.

We want it because we want it, and not necessarily because we are ready for it.

Meanwhile, both case counts and test positivity rates have been on the rise for several weeks now, likely due to a combination of an uptick from the impact of increased visitation over Labor Day weekend; maskless indoor political rallies; and bar reopenings.



Other problems have emerged. As visitation dropped in July, room rates across Las Vegas also dropped in order to drive visitor traffic. The visitor demographic has also changed dramatically, such that the average visitor is almost certainly less wealthy (for starters). And with the change in demographic has come a startling uptick in violence on the Las Vegas Strip in the form of shootings, shootings, shootings, shootings, shootings, stabbings, shootings and stabbings, and drive by scooter beatings.

Which has led to increased security measures:

It can be debated whether lower room rates have caused the shift in demographics and thus the uptick in violence, but it's also likely true that room rates are low because Las Vegas as currently being presented is not attractive to more sophisticated, pandemic-aware visitors.

The simplest solution to all of this is to require a negative COVID test in order to check in to a Las Vegas hotel. This will weed out the riff raff by forcing people to make the effort to get tested to begin with – the very act of which in itself is a screen – while creating an environment where most everybody is tested; where most everybody is identified and thus less likely to commit random acts of violence; and where most everybody has made an investment in being in a safe environment again by virtue of making the effort to get tested.

Moreover, if any of this seems like too much, this is a measure with a natural expiration date along with the pandemic.

Shangri-Las Vegas: Bubble City

This order of operations is completely backwards, by the way.

From the outset of the pandemic, what should have happened is that at the federal level, we should have:

  1. Restricted movement between states (See: Australia) 
  2. Set the rules for interstate travel (i.e. quarantines/testing requirements)
  3. Ramped up testing capability to facilitate this.

All of that failing, prior to opening up the casinos, the state of Nevada should have implemented visitor restrictions in the way of 14-day self-quarantines for visitors from hotspot states, with the best practice/enforcement mechanism likely being to require visitors to show up with a negative COVID-19 test in order to check in to a Las Vegas hotel (again, see: Maine, Monaco).

Only then – with the proper measures already in place and once Las Vegas was in an objectively healthy state – would we consider what conditions would be necessary to hold larger events.

Instead, none of those things have happened, and Las Vegas is not in an objectively healthy state by any reasonable measure or any reasonable comparison. Rather, we want to have conventions simply because we want to have them, and the only reason MGM and Wynn have moved to create rapid testing-enabled event bubbles is out of a desire to hold such events.

This is completely backwards.

The pandemic is not over. Cases are back on the rise, and – much like the events of the past week in the White House – much of this damage is entirely self-inflicted and a result of our own stupidity. It seems probable that we will face another, possibility bigger test come winter time when staying outdoors is more difficult, and also as cases across much of the country are back on the rise. Johns Hopkins University notes that 29 states have higher-than-recommended test positivity rates, with Nevada near the top of the list.

And Nevada still has no visitor restrictions – no way of screening visitors – from hotspot states or otherwise. This time, if we are to stay open safely, we need to have these screens in place before the next major test comes.

If technology is at a level such that we're already talking about implementing rapid testing in order to enable event bubbles, then the conversation about turning Las Vegas into a virtual bubble city (and perhaps Nevada into a virtual bubble state, or at least as much as one can be without locking down borders) is one that needs to happen now – and not after Disney World does it.

Besides, who wouldn't want to be in this bubble? Who wouldn't want to come to Shangri-Las Vegas – the land where most everybody else who comes here is tested, and where we can safely have shows, meetings and conventions, and other live entertainment because of it?

Jeff Hwang owns MGM Resorts and WYNN Resorts.  The Motley Fool owns shares of and recommends Walt Disney and recommends the following options: long January 2021 $60 calls on Walt Disney and short October 2020 $125 calls on Walt Disney. The Motley Fool has a disclosure policy. Jeff is a gaming industry consultant and the best-selling author of Pot-Limit Omaha Poker: The Big Play Strategy and the three-volume Advanced PLO Series. Follow Jeff on Twitter @RivalSchoolX 


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