Spectre of Strike Could Paralyze Vegas Casinos in June

Roughly 25,000 members of the Culinary Union who work at 34 different casinos across Las Vegas cast a vote that could see a massive employee walk out on June 1. The union voted for a strike in 2002 before a last minute deal was reached. The last legitimate strike occurred in 1984 and lasted 67 days, costing Las Vegas tens of millions in revenue.

MGM Resorts International (NYSE:MGM) stock was down 0.89% in early afternoon trading on May 23. Shares have dropped 5.4% in 2018 so far. The MGM Grand is one of several properties that could be severely impacted by the strike, as it could see the loss of bartenders, housekeepers, food servers, and other critical support staff.

Caesars Entertainment Corporation (NASDAQ:CZR) and MGM together operate over half of the properties that would be affected by the strike. Caesars stock was down 2.95% in early afternoon trading. Both companies have reiterated the intention to continue negotiations, while remaining mum on comments about the strike vote itself.

In addition to revenue and gambling income losses during the 1984 strike, union members also lost over $75 million in wages and benefits. Workers also face a mounting risk from automation that allows customers to check in and out without interaction with personnel, as well as automated systems used by bartenders.

It is typically difficult to predict the outcome of negotiations, but the massive loss in potential revenue is often enough to push forward a deal. This could present an opportunity for a reasoned gamble on both of these stocks.