22Jun11:11 amEST

Has Mr. Corona Even Filed for His Gaming License Yet?

It has been a full month since we examined the lingering psychological and behavioral issues likely to throw cold water on various casino bullish theses as Las Vegas has already begun the reopening process. To summarize, the increased pandemic safety measures being put in place across various casinos were likely to have a risk-averse subconscious effect on gamblers who otherwise would be inclined to take their usual brazen risks and, as usual, benefit "the House." 

After initial relief rallies on hope throughout April and parts of May, the casinos have mostly sputtered of late, namely the big three: LVS MGM WYNN. Of course, the online betting angle may not be helping the cause, with DKNG GAN GMBL rallying nicely and attracting plenty of hot money alongside the hope of PENN being the up-and-comer. 

But the analysis still stands: Brick and mortar casinos face headwinds for the next six-to-eighteen months as plenty of uncertainty remains about the virus, not to mention intermittent outbreaks of civil unrest at various times. The most likely scenario is we continue to see scattered, localized outbreaks of the virus around the country unless and until a bonafide vaccine enters the market (which, as you know, could be anywhere from many months to many years away, if ever). 

Casinos, of course, will still have their fair share of patrons over time.

But that was never the issue: The issue is the seemingly minor mathematical "edge" that the House derives is predicated on many poor bets placed by patrons over a long period of time against the backdrop of foot traffic to various high margin restaurants, gift shops, retail stores, shows/concerts, nightclubs, etc.. And the likely sustained high unemployment is yet another headwind to consider as well.

LVS , a name I went short on Friday, is sporting a textbook weekly chart bear flag, below. I see not discernible bottoming formation yet and am looking for a retest of the March lows in all the major casinos before this is all said and done. 

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