Atlantic City Labor Agreements Boost Casino Stocks

The most prominent Atlantic City casino employee union has signed a labor agreement with four major casinos in the city – MGM Resorts’ Borgata, Caesars Entertainment’s Caesars, Harrah’s, and Tropicana, which automatically canceled a planned strike during the July 4 weekend. As a result, MGM and Caesars’ stocks had a boost on July 1.

Union Employees Get Significant Pay Rise

In May, the contracts of Atlantic City casino workers that are union members expired and negotiations started. However, things did not seem to go towards a resolution, so the unions threatened strike action during the casinos’ most active and profitable holiday period – the upcoming Fourth of July weekend. In the last moment, late in the evening on June 30, an agreement was reached between Local 54 of the Unite Here, a major union for casino employees in Atlantic City, and MGM’s and Caesars’ casinos. The stocks of MGM Resorts and Caesars Entertainment were immediately affected by this development, rising by 2% and 1.3% respectively on the next day.

An agreement is still pending for the Hard Rock Casino so it could possibly suffer an employee strike, however, the probability of it also signed a deal has gotten higher after the recently achieved success by Local 54.

Local 54 of the Unite Here president Bob McDevitt excitedly remarked:

This is the best contract we’ve ever had. We got everything we wanted and everything we needed. The workers delivered a contract that they can be proud of for years to come.

Casino workers also noted that they are very excited about the agreement. A housekeeper that has been working at Caesars Entertainment’s Harrah’s for over 24 years commented that in her long career she has never received such a major increase in her salary.

Hard Time for the Casino Industry

The dispute with the unions came at a very difficult moment of time for the casino industry as it is struggling to recover from the COVID-19 pandemic and is suffering from labor shortages and rising inflation, which is affecting not only costs in general but the disposable income of households.

Yet those same reasons led the unions to demand higher pay for their members. In previous labor agreement negotiations, the unions mainly focused on pension and health benefits but now their main goal was to secure a significant increase in salaries to help casino workers cope with the rising living costs such as the increasing prices of fuel, food, rent, etc.

The exact amount of the agreed pay rise has not yet been revealed as the agreement is subject to ratification from union members before it comes into force.