Customers return as Nevada tavern operators restart their slot machines

As soon as the green light turned on June 4, Nevada's taverns, bars and other restricted gaming locations flipped on slot machines that had been silenced for 78 days as part of the casino industry closure amid the COVID-19 pandemic.

Even at 12:01 a.m. on a Thursday, customers were ready to play.

“Honestly, in that moment, it was like nobody gave a s**t about coronavirus. There was pent-up demand and people wanted to get out (of the house),” said Scott Godino, who operates the two Born and Raised taverns in Las Vegas and Henderson.

Other establishments experienced similar celebrations.

Jimmy Wadhams, vice president of tavern operations for PT's Entertainment, said many loyal customers of the company's 66 locations in Las Vegas and Reno visited in the early morning hours of June 4 and throughout the weekend.

“People wanted to get back and play,” Wadhams said. “There definitely was a pent-up demand. We've seen a lot of our regulars and some new customers as well.”

Matt Flandermeyer, who operates five Wahoo's Fish Tacos taverns in Las Vegas and Henderson, reopened the restaurant portion of the businesses when the state's ban on dine-in seating was lifted. The bar and slot machine business came back quickly when casino swing shift employees returned to work.

“We've always had a good swing shift crowd who stop by on their way home, and they came back pretty quick,” Flandermeyer said.

According to the March 31st Gaming Control Board's Quarterly Report, Nevada had 1,998 restricted gaming licenses – taverns, bars, restaurants, as well as grocery, drug and convenience stores – that are allowed to operate 15 slot machines or less and without table games. The facilities had 19,054 slot machines statewide.

Many locations contract with a slot machine route operator that owns and manages the games, either through a revenue sharing agreement or a set-fee space-lease contract.

Golden Entertainment, which owns PT's, is the state's largest slot machine route operator with more than 1,000 locations in Nevada and Montana. The company helped the bar and tavern owners manage gaming reopenings in both states.

“We worked together with our route partners to share any of the knowledge we gained in order to put best practices into place,” Wadhams said.

Century Gaming General Manager Tim Cogswell, whose company oversees slot machines for some 300 locations in Nevada, said work began quickly with its route partners to get them prepared for relaunching gaming.

“The ultimate goal was to make every machine live and playable,” he said.

Regulatory guidelines

Restricted gaming locations had to comply with health and safety policies outlined by the Nevada gaming regulators. The protocols covered cleaning and sanitation of the games, increasing the space between slot machines under social distancing guidelines, and occupancy limits of 50 percent capacity at the location.

Unlike the major casino companies, restricted locations were not required to file their own reopening plans with the Gaming Control Board, only needing to confirm in writing – via correspondence or e-mail – that they would comply with health and safety policies.

Distancing slot machines proved to be a challenge for some locations where the vast majority of the games are embedded into a tavern's bar.

The use of plexiglass dividers to separate bar top slot machines was proposed during a nearly three-and-a-half-hour workshop the Control Board held with health and safety experts involved in managing Nevada's response to COVID-19 last month.

Control Board Chairwoman Sandra Douglass Morgan said the tavern operators needed to inform regulators in writing if plexiglass panels were part of the reopening solution.

“The board has told restricted locations that plexiglass between machines is fine as long as they clean and disinfect them on a regular basis,” Morgan said.

Godino said the plexiglass was the best answer for Born and Raised. Both locations are roughly 6,000 square feet in size.

“A lot of the big tavern operators discussed the plexiglass solution. We're not like casinos where you can just pick up your slot machines and move them around,” Godino said. “It's not a simple solution to turn off the games. What do you tell a customer who wants to play his favorite game and it's closed down? This solution works for us.”

Wadhams said that distance between slots wasn't an issue for PT's, because its taverns have large bars and the games were already spaced apart. He said the company simply removed bar stools to allow distance between patrons. Just in case they were needed, however, Wadhams said PT's purchased plexiglass panels.

Flandermeyer used plexiglass sparingly in between a few of his slot machines at the Wahoo's at Sunset Road and Rainbow Boulevard. The idea was to allow additional space around the bar area.

“We followed the letter of the law,” he said.

Slots in restricted locations are also required to be cleaned and sanitized each time a player completes a gaming session and before a new player is seated.

Casinos have multiple employees to perform that particular function. In non-restricted locations, the job falls to bartenders and cocktail waitresses.

“All our staff spent time on an extensive training program for cleanliness,” Wadhams said. “Our staff has embraced it.”

Cogswell said the effort to quickly clean and sanitize games can challenge a small bar.

“Oftentimes, there is just one employee on a shift,” he said.

‘Incidental' revenues

State gaming regulators consider revenues from slot machines as “incidental” to a restricted gaming location's primary business, although a percentage figure to what constitutes “incidental” has never been established.

The issue was heavily debated going back to 2010, when the Dotty's chain of taverns began taking over former restaurant and tavern locations closed during the recession. Casino companies and traditional tavern businesses complained that Dotty's was skirting regulations covering restricted locations by operating as glorified slot machine parlors.

Meanwhile, restricted gaming locations do not report monthly and annual revenue figures to the Gaming Control Board and are taxed differently than casinos, which pay 6.75 percent monthly on taxable gaming revenue in excess of $134,000.

Restricted locations pay an annual fee of $250 per machine and quarterly fees based on the number of games. For the first five games, the quarterly fee paid to the state is $81 per machine. The locations pay $141 per quarter for each of the next 10 machines. Under the formula, the total annual tax for a location with 15 slot machines is $11,010.

Golden Entertainment is the only publicly traded slot machine route operator in Nevada, which requires quarterly earnings reporting with the Securities and Exchange Commission.

The company reports its revenues from the slot machine route business under the section “Nevada Distributed Gaming,” which combines food, beverage and gaming revenues from PT's taverns and revenues from the route business. In 2019, the division accounted for $285 million in total revenue.

Dining first

Flandermeyer said 30 percent of his revenues come from gaming. Four of the locations have 15 slot machines but the restaurant in Boca Park has just five games. Wahoo's is a franchise of the Southern California restaurant chain.

Wadhams said PT's reopened its five top producing taverns in Las Vegas with just the restaurant operations initially to “get a good understanding” of operating under COVID-19 restrictions. Another five locations were reopened a week before the anticipated restart of gaming. Only one of the company's taverns has not reopened.

The dining choices at PT's have been reduced to just the most popular items while a QR code on a coaster allows a customer to access a digital menu.

Godino said the Born and Raised locations restarted their food service a week ahead of gaming to get employees back to work, knowing the slot machines would soon be reopening.

Disclosure: Howard Stutz oversaw corporate communications for Golden Entertainment from July 2016 to May 2018. He has no financial interest in Golden Entertainment.

Howard Stutz is a freelance gaming reporter for The Nevada Independent and the executive editor of CDC Gaming Reports. He has been a Nevada journalist for 30 years. He can be reached at howardmstutz@gmail.com. On Twitter: @howardstutz.

The Nevada Independent is a 501(c)3 nonprofit news organization. The following people or entities mentioned in this article are financial supporters: Sandra Morgan - $100.00.