By: Ronnie Jones, Chairman, Louisiana Gaming Control Board

Note: Public Policy Review Editor Laura Briggs reached out to Ronnie Jones of the Louisiana Gaming Control Board as part of a series seeking insight on issues regulators are facing due to COVID-19. This is his personal account of one of the nation’s hardest-hit areas.

On the context of Coronavirus in Louisiana:

In talking to my colleagues in other states early on, few fully understood the seriousness of the pandemic in Louisiana.  While some early epidemiological opinion suggests that two weeks of crowded streets throughout Louisiana during Mardi Gras contributed to the spread, it is yet to be confirmed.  Though it sounds plausible we simply don't know with any degree of certainty.  What we do know is that Mardi Gras occurred just as the pandemic's effects in the U.S. were becoming more evident.  Had the huge public celebration come two weeks later in the calendar, it likely would have been cancelled.  But hundreds of thousands of visitors came to the state and returned to their home areas, perhaps carrying with them the virus that was unwittingly passed around during their stay. 

But this is where we are today--on a per capita population basis Louisiana ranks 3rd behind New York and New Jersey in the number of infections and the number of deaths.  In fact, one Louisiana parish (county) actually has the highest per capita death rate in the country, even higher than New York.  Of the 25 counties throughout the country with the highest per capita death rate, ten are Louisiana parishes.  We have clearly been challenged.  I guess the good news might be we are second only to New York in the per capita number of tests administered.  At least we are trying very hard to determine the level of infection in the state and react appropriately.

Early on there was some reluctance to shutter non-essential businesses when the topic was first broached.  The governor, in an initial compromise measure attempted to set capacity limits to promote social distancing.  But it was obvious that capacity controls would be difficult to enforce at casinos.  The first executive order prohibited crowds of no more than 250 from being in the same common space, like on a gaming floor at a casino.  That put the Louisiana State Police Gaming Division in a difficult position for enforcement purposes.  First of all, there was uneven application of the order in the several regions of the state.  The order was enforced one way in north Louisiana and another in south Louisiana.  Secondly, by limiting the gaming floor space to 250 patrons, the casinos ended up with perhaps 300 patrons shoulder to shoulder in lobbies waiting to be permitted onto the gaming floor.  It was the Law of Unintended Consequences playing out before our eyes.  

As our Board and State Police worked diligently to rectify both issues, it became increasingly clear that capacity control was not going to work.  After discussion with the governor's staff we all agreed that gaming should be shut down throughout the state.  The Board’s orders were quickly drafted and issued shortly thereafter.  Paradoxically, it was the most difficult decision I’ve made as Chairman.  And the yet the easiest.  Only hours later the governor's executive orders went even further shuttering all non-essential businesses including bars and restaurants (except for take-out).  As a former West Point grad and Army Ranger, Governor John Bel Edwards understood what he needed to do to protect public health.  He made that decision despite intense pressure from a number of sectors to permit commerce to continue without restrictions.  He also ordered residents to stay at home and shelter in place.  It was the governmental equivalent of putting the state’s 4.6 million residents in “time out” until the crisis abates.  The last few weeks have proven both the Board’s and the Governor’s decisions correct.  

On the shutdown process:

I had been speaking with a number of general managers over the days preceding the issuance of Board orders shutting down gaming so none were really surprised when it happened.  Indeed all were supportive.  On Monday, March 16 we ordered the state's 20 casinos to cease business at midnight.  We also directed that nearly 13,000 video draw poker machines at 1,600 locations throughout the state be disabled from play.  Historically it had not been unusual to shut down one or more casinos in the path of an approaching hurricane, but a total cessation of gaming activities in the state was unprecedented.

All casinos had existing shutdown plans on file with the State Police and we knew that the process could take hours.  In consideration of the time needed we gave properties nearly 12 hours to carry out the order.  There was no push back from the casino industry.  None.  Not one general manager complained, at least to me or my Board.  Not one CEO called.  I think the industry understood the nature of the public health threat.  There was concern for team members and customers in equal measure.  

Video poker devices were electronically disabled from the State Police's central control system.  More than 2,500 of those locations were bars which were closed as part of the governor's order.  Many of them were "mom and pop" operations and predictably very dependent on the gaming revenue.  Now not only were the devices disabled, but the bars were closed as well.  It is possible some of those bars may never reopen.  The state's 200 truck stops would continue to operate as truck stops providing an essential service to commercial transportation but the 7,600 gaming devices at the locations went dark.

On the impact: 

Everybody knows that the state will take a huge hit from the loss of fees from gaming operations during the shutdown.  But few outside government realize that in recent years gaming revenue (to include the state's lottery) had overtaken oil and gas revenue as a critical funding source for the state. In total it provides nearly 10 percent of the state's general operating budget.  State Police estimate that "if" gaming were to resume after the current orders expire at the end of April, gaming revenue would be down 17 percent when compared to the same period last year.  In raw dollars that amounts to $443million in lost gross gaming revenue and a loss to the state of more than $97 million in fees.  And speaking of oil, there was another unrelated but stark reality for the state--the plunging price of oil.  The per barrel price at the beginning of the year was in the $70 range.  Now it is less than $30.  For our state, every drop of $1 in the per barrel price of oil is a loss of about $13 million to the state's treasury.  You do the math.  

But the damage goes beyond just lost gross revenue to licensees and lost fees to the state.  The shutdown of gaming has a profound impact on the thousands of employees who work directly for gaming operators.  Most properties are down to a handful of employees while the bulk of others have been furloughed.  In some cases health and other benefits have been continued into the summer.  Hopefully that will keep some afloat in this chaotic sea of uncertainty.  But those are real people with mortgages, car notes, children and extended family members to care for.  The promise of quick government support has so far been just a promise for most employees.

Then there are the thousands of other businesses who rely on gaming as customers.  On the retail side that's all the vendors providing food, liquor, flowers, other commercial commodities.  On the service side are the scores of contractors who provide plumbers, carpenters, housekeepers, computer technicians, and everything else that keeps businesses operating.  

The ripple effect is mind numbing.  We are, all of us, waiting to exhale.  Waiting for the so-called curve to flatten.  Waiting to resume some semblance of "normalcy" again.  And with that, when the public health officials tell us that it is safe to do so, gaming operators can begin the process of reopening.

On moving forward:

We know when the current orders expire but what we don't know and can't predict is where the state will be in terms of COVID 19.  Will the orders have to be extended into May?  We simply don’t know.  But I am speaking to general managers on a daily basis trying to anticipate what kinds of problems we will all experience when we try to jump start gaming operations.  I am also in regular contact with our partners at the State Police Gaming Division planning for how a crush of employee license renewals and new applications will be managed.  The absolute last thing I want to happen is for "processes" to create a logjam in attempts to restart gaming operations.  We will, all of us on the regulatory side, have to balance expediency with the need to maintain integrity in the industry and public confidence in gaming operations.

Insofar as lessons learned, at least for me, I'm not ready for that reflective assessment.  In due time and after the clouds have cleared I'll be more inclined to talk about those lessons.  As an eternal optimist I believe gaming will survive as an industry in Louisiana.  It may take a while and the landscape may look very different, but gaming will re-emerge in the state as a critical part of our social and economic fabric.

- Ronnie Jones, Chairman, Louisiana Gaming Control Board

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