Caesars Entertainment Corp. informed the Nevada employment department that it would lay off thousands of casino workers in the face of the coronavirus crisis just days before it was forced to close its properties in the state, the Reno Gazette-Journal reported.
In a letter to the Nevada Department of Employment, Training and Rehabilitation dated March 14, the casino giant said that it would cut its workforce by 3,200 employees due to uncertainties and disruptions stemming from the Covid-19 pandemic.
Caesars also noted that the job cuts would take place on March 15. The letter, obtained by the Reno Gazette-Journal, said that given the uncertainties surrounding the coronavirus pandemic, “we are unable to make a determination as to whether the layoff will be temporary or permanent.”
A day after the letter was posted, Nevada Governor Steve Sisolak issued an order that all non-essential businesses across the state close for a 30-day period to help curb the spread of the highly contagious virus that has gripped the world.
Caesars’ Letter Violates Law
The Worker Adjustment and Retraining Notification Act of 1988 requires employers to provide the state with notice at least 60 days in advance. However, Caesars said in its letter that the rapid spread of Covid-19 triggered financial fallout that required urgent measures.
The Las Vegas casino company is one of many in the sector to be dismissing thousands of employees in response to the coronavirus crisis and its impact on the gaming, hospitality, and travel industries.
On Friday, major regional casino operator Penn National Gaming said that it would place 26,000 employees on furlough for the duration of the Covid-19 emergency.
The recent Caesars workforce cut affected employees at its flagship property Caesars Palace as well as at Planet Hollywood, Harrah’s, Bally’s, The Cromwell Hotel, The LINQ, Rio All-Suite Hotel & Casino, Paris, and Flamingo, among others.
In its letter to Nevada’s employment department, the company said that the layoff was the result “of an unforseeable circumstance.”
Coronavirus Could Derail Mega-Merger
Caesars is in the middle of a $17.3 billion tie-up with Reno-based fellow casino operator Eldorado Resorts. The deal was anticipated to close by late March or early April, but this timeframe can no longer be pursued due to the disruptions created by the coronavirus outbreak.
Caesars and Eldorado need to secure regulatory clearance in all states where they run properties. Regulators in some of those have already blessed the mega-deal, but others have put it on the back burner to focus on more pressing issues.
Nevada’s gaming watchdog is not likely to vote on the merger until at least mid-April, while its New Jersey counterpart can approve it as early as May when its next meeting is scheduled to take place.
Eldorado has now started paying Caesars around $2.3 million in ticking fees because the deal failed to close by March 25, or around nine months after it was announced.
Earlier this month, the CEO of the Reno-based casino operator seemed enthusiastic about its combination with Caesars. However, that enthusiasm can eventually get thinner if Covid-19 continues to wreak havoc in the casino world.
And if Eldorado decides to back off from the deal, it will have to pay a break-up fee of $800-plus-million which, according to experts, could force the company into bankruptcy.