With a United Auto Workers strike already throwing the Big Three Detroit automakers into disarray, Detroit is facing a second potential strike from another sector that represents a major revenue stream for the Motor City.
Workers at the three Detroit casinos could strike if a new contract is not reached by an Oct. 16 deadline. Workers voted 99% in favor of a strike authorization on Friday, showing strong support for the potential move.
The move would see union workers at the MGM Grand Detroit, owned by MGM Resorts International (NYSE: MGM); the Hollywood Casino at Greektown, owned by PENN Entertainment (NASDAQ: PENN); and the MotorCity Casino go on strike.
Similar to the auto strike in whicih UAW workers are seeking a pay raise and better retirement benefits, Detroit casino workers are looking for a similar deal.
“It is a shame that this company would actually then attack, humiliate, micromanage.. UAW members… while also offering no commitment,” said Michigan Congressman Jonathan Jackson (D-1st), regarding the elimination of outsourcing
The workers are pushing for job protection related to a rise in technology, which could put online sports betting and iGaming at the forefront of a strike.
A report from PlayMichigan said that new contract negotiations have been ongoing since September, with five unions involved with talks with the Detroit Casino Council. The unions include UNITE HERE Local 24, UAW, Teamsters Local 1038, Operating Engineers Local 324 and the Michigan Regional Council of Carpenters.
Workers that could be involved in the strikes include those who work in casinos, retail outlets, housekeeping for the hotels and casinos and food and beverage.
A record quarter reported by the publicly traded MGM Resorts International is among the items cited by the unions in negotiations. Unions argue that employees should get a bigger share of profits, with the Detroit casinos posting $2.27 billion in gaming revenue in 2022, the largest ever total.
Through the first eight months of 2023, the three Detroit casinos have posted revenue of $853.7 million, up 0.8% year-over-year.
The small gains are led by the Hollywood Casino at Greektown, which has year-to-date revenue of $194.8 million and posted a total of $24.4 million in August. Through the first eight months of the year, revenue is up 14.6%.
MGM Grand Detroit leads the way in revenue, accruing $400.7 million year-to-date in 2023 and $49.6 million in August. MGM Grand Detroit’s year-to-date revenue is down 1.7% on a year-over-year basis.
“Objections that extending benefits encourages strikes, or that falling behind on one’s bills and facing eviction is the cost of deciding to walk off the job, are arguments for an economy built upon heavily coerced labor,” said Alex Press, a writer from Jacobin.
MotorCity Casino has year-to-date revenue of $258.2 million through August and posted a total of $30.7 million in August. Year-to-date revenue is down 1.7% for the casino.
Sports betting at the Detroit casinos continues to fall as Michigan residents shift to online sports betting at platforms like DraftKings Inc (NASDAQ: DKNG) and Flutter Entertainment (OTC: PYDPY)-owned FanDuel. In August, sports betting totaled around $10 million for the three Detroit casinos, not counting online partners.
If the physical casinos are not operating during the NFL and NCAA Football seasons, any bettors who normally wagered in person could shift to online sports betting.
The trend could also occur with physical casino customers shifting to iGaming, which would benefit DraftKings and FanDuel. DraftKings and FanDuel hold around 60% combined market share of the online sports betting market in the state. BetMGM is the dominant iGaming player in the state, followed by FanDuel and DraftKings, respectively.
The timing of a strike could be particularly bad for the Detroit casinos, as the Detroit Lions are posting a 3-1 record this season and seeing strong support from fans.
The Detroit Pistons and Detroit Red Wings each kick off their 2023-2024 seasons in October and many fans visit the casinos around the games or when making a weekend trip out of a game.
A potential strike for Detroit casinos also comes as Las Vegas hospitality workers are also considering a strike. Companies like MGM that are exposed to both Detroit and Las Vegas could see a negative impact.
Casinos pay taxes to the state of Michigan and city of Detroit. Analysts already expect the auto strikes to have a negative impact on the state of Michigan. A loss of tax revenue and the potential economic impact of strikes by both the UAW and casino workers could weigh heavily on the city and state going forward.
Produced in association with Benzinga
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