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McDonald’s is working to introduce a value meal in U.S. stores to help offset an increasingly challenging environment for consumers.
The $5 meal could include four items: a McChicken or McDouble, four-piece chicken nuggets, fries and a drink.
The potential new offering comes at a time when low-income consumers are beginning to pull back on spending, particularly at fast-food brands.

A McDonalds located on Santa Monica Blvd in Los Angeles, California, April 1, 2024.
Robert Gauthier | Los Angeles Times | Getty Images

McDonald’s is working to introduce a value meal in U.S. stores to help offset an increasingly challenging environment for consumers, two people familiar with the matter told CNBC.
The people said the $5 meal could include four items: a McChicken or McDouble, four-piece chicken nuggets, fries and a drink. The value meal was first reported by Bloomberg News.

The potential new offering comes at a time when low-income consumers are beginning to pull back on spending, particularly at fast-food brands. Mentions of low-income consumers on company earnings calls are at their highest levels in nearly two years, according to data from Bank of America. Executives from McDonald’s to Wendy’s to Dave and Buster’s have all noted the restraint in spending. 
McDonald’s recently reported a mixed first quarter, with U.S. same-store sales slightly missing expectations. Higher prices helped grow average checks, but some consumers pulled back as a result of the steeper costs.
“Consumers continue to be even more discriminating with every dollar that they spend as they faced elevated prices in their day-to-day spending, which is putting pressure on the [quick-service restaurant] industry,” CEO Chris Kempczinski said on the company’s earnings call on April 30.
He added that McDonald’s has to be “laser-focused” on affordability to attract diners.
On the call, Kempczinski said the company is working on a national value deal in the U.S., and the company’s Chief Financial Officer Ian Borden said the U.S. leadership team was working closely with owner-operators in this environment. McDonald’s corporate and franchisees, who run 95% of McDonald’s locations and weigh in on such offerings, are often at odds over promotions that could eat into owners’ profits.

An initial proposal by McDonald’s for the $5 value meal did not clear necessary hurdles, and additional details are now being discussed, according to a person familiar with the process. A second person said Coca-Cola added marketing funds to the equation to make the deal more appealing.
McDonald’s and Coca-Cola declined to comment to CNBC.
— CNBC’s Amelia Lucas contributed to this article.

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Fat Brands and its chair Andy Wiederhorn were indicted for a “sham” loan scheme that netted him $47 million.
Wiederhorn, 58, stepped down as CEO last year following the company’s disclosure that the U.S. Securities and Exchange Commission was investigating him.
Fat Brands’ portfolio includes Fatburger, Johnny Rockets and Twin Peaks.

Andy Wiederhorn, former Fatburger CEO.

Federal authorities on Friday charged Fat Brands and its chair Andy Wiederhorn of committing a brazen scheme that netted him $47 million in bogus loans from the restaurant company that owns Fatburger, Johnny Rockets and Twin Peaks.
Shares of Fat Brands closed down 27% on Friday. The company has a market value of $92 million.

Fat Brands, Wiederhorn and a few other people were criminally indicted by a federal grand jury in Los Angeles for wire fraud, tax evasion and other counts related to the alleged scheme.
In a separate civil complaint, the U.S. Securities and Exchange Commission accused the company and Wiederhorn of violations related to the same conduct.
“These charges are unprecedented, unwarranted, unsubstantiated and unjust,” Fat Brands counsel Brian Hennigan said in a statement. “They are based on conduct that ended over three years ago and ignore the Company’s cooperation with the investigation.”
Wiederhorn, who was convicted two decades ago in a criminal case that involved similar conduct, was separately criminally charged in an indictment in Los Angeles of being a federal felon in possession of a handgun and ammunition.
“We look forward to making clear in court that this is an unfortunate example of government overreach — and a case with no victims, no losses and no crimes,” Wiederhorn’s attorney Nicola Hanna said.

As chief executive of Fat Brands, Wiederhorn, 58, allegedly directed the company to loan its own funds to him, with no intention of ever paying the “sham” loans back, according to the indictment.
The SEC alleges that Wiederhorn then used the cash to pay for private jets, first-class airfare, luxury vacations, mortgage and rent payments, plus nearly $700,000 in “shopping and jewelry.”
Wiederhorn stepped down as CEO last year, following the company’s disclosure that the SEC was investigating him. In February, Fat Brands disclosed it had received a Wells notice from the agency, meaning the SEC was planning to take action against it.
Wiederhorn’s alleged fraud accounted for roughly 44% of Fat Brands’ revenue between 2017 and 2021, which meant the company often was not able to pay its bills. In those situations, Wiederhorn would allegedly redirect funds from credit cards paid for by Fat Brands back to the company with assistance from his son Thayer, who was then the company’s chief marketing officer and is now its chief operating officer.
Fat Brands never disclosed the cash transfers as related party transactions to investors. In 2020, the cash transfers were written off after the company’s merger with Fog Cutter Capital Group, Fat Brands’ largest shareholder, which also happened to be majority owned by Wiederhorn, according to the SEC complaint.
Ron Roe, the company’s vice president of finance and former chief financial officer, and Rebecca Hershinger, another former CFO, were also named as defendants in the SEC complaint. Hershinger and tax advisor William Amon were also named in the indictment. Hershinger’s attorney Michael Proctor said in a statement to CNBC that the charges are baseless.
Additionally, as far back as 2006, Wiederhorn has owed taxes for his personal income to the IRS. He also did not report any of the so-called loans from Fat Brands as income, according to the indictment. As of March 2021, Wiederhorn owed $7.74 million to the IRS for his unpaid personal taxes.
Twenty years ago, he pleaded guilty to filing a false tax return and paying an illegal gratuity to an associate while leading Fog Cutter Capital. He paid a $2 million fine and spent more than a year in federal prison in Oregon. During his time in prison, Fog Cutter Capital’s board opted to pay him a bonus equal to the fine and continued paying his salary, a decision that attracted widespread criticism.
Wiederhorn is expected to be arraigned Friday afternoon in U.S. District Court in downtown Los Angeles. The remaining defendants’ arraignments are expected to be in the first week of June.

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Rivian, Lucid and Nikola this week each detailed plans to reduce costs while attempting to grow operations and make their first profits.
The efforts have ranged from job cuts and production changes to supplier rearrangements and shifting priorities.
All three of the high-profile EV startups are near 52-week or all-time lows.

R1T trucks on the assembly line at the Rivian electric vehicle plant in Normal on April 11, 2022. 
Brian Cassella | Tribune News Service | Getty Images

Once-hot electric vehicle startups — years ago fueled by low interest rates, free cash and Wall Street bullishness — are now scrambling to prove they can survive in tougher market conditions. That is if they haven’t gone bankrupt already.
Chief among their talking points: cash.

Executives of Rivian Automotive, Lucid Group and Nikola Corp. this week each detailed plans to reduce costs while attempting to grow operations and make their first profits. Those efforts have ranged from job cuts and production changes to supplier rearrangements and shifting priorities.
The scramble comes as EV adoption takes hold slower than many expected and after companies spent billions in an attempt to rush vehicles to market to gain first-mover advantages in white-space segments.
The slowdown, as well as the increased competition, has even impacted U.S. EV leader Tesla, which is in the midst of a global restructuring that includes laying off roughly 10% of its workforce.
Wall Street analysts have referred to the current state of the electric vehicle market as an “EV winter,” an end to so-called EV Euphoria or, more optimistically, a temporary pullback that carmakers will need to overcome for long-term gains.
“US EV adoption likely entered an air pocket after having penetrated initial adopters & specific regions,” Citi analyst Itay Michaeli wrote in a Thursday investor note. “The situation will not change overnight, but we see reason for optimism over the next 12-18 months.”

Stock chart icon

Performance of Rivian, Lucid and Nikola stocks over the past year.

Rivian has been on a cost-cutting mission for months. It has trimmed staff, retooled its Illinois plant to increase efficiencies and paused construction of a new multibillion-dollar factory in Georgia. That last measure is expected to save more than $2.25 billion in capital spending, including the impact of starting production of Rivian’s next-generation R2 vehicle at its current plant in Normal, Illinois.
Rivian reported $7.86 billion in cash, cash equivalents and short-term investments to end March, with more than $9 billion in total liquidity.
Lucid, for its part, ended the first quarter with approximately $4.6 billion in cash, cash equivalents and investments, with total liquidity of approximately $5.03 billion.
Lucid CEO Peter Rawlinson said he’s never been “more optimistic” about the startup’s future, despite notable demand issues, significant losses and capital needs. The company raised $1 billion from an affiliate of Saudi Arabia’s Public Investment Fund, its largest shareholder.
“We have identified additional opportunities in cost of goods sold, and we’ll continue to focus on implementation and further areas for cost out. Longer term, our technology will be key driver of our gross margin,” Rawlinson told investors Monday. “With scale, I believe you will see strong gross margins with efficiency the key enabler.”
Rawlinson said the $1 billion illustrated the “continued confidence and steadfast support” of the Public Investment Fund, which owns roughly 60% of the company, according to FactSet.
Rivian and Lucid both reported wider first-quarter losses than Wall Street was expecting, according to estimates compiled by LSEG.
Nikola actually beat the Street, slightly, with a 9-cent per-share loss during the first three months of the year, but revenue of $7.5 million was less than half of what analyst compiled by LSEG were anticipating.    
Unlike Rivian and Lucid, Nikola is exclusively focused on commercial vehicles rather than ones to retail customers. Nikola CFO Thomas Okray said the company needs to lower its costs, while continuing to expand its sales, including potentially reducing prices for large customers in order to build scale.
“We definitely need to optimize our cost structure. No question about it,” Okray told investors Tuesday.
Nikola’s cash reserves are far lower than Lucid and Rivian. The company’s assets included $469.3 million to end the first quarter, consisting primarily of cash and cash equivalents of $345.6 million and truck inventory of $61.3 million.

Lucid Group CEO Peter Rawlinson and Derek Jenkins, senior vice president of design and brand at Lucid Motors sit on frunk of Lucid’s Gravity electric SUV during the press day preview of the Los Angeles Auto Show in Los Angeles, California, U.S. November 16, 2023. 
David Swanson | Reuters

Shares of Rivian, Lucid and Nikola all trade near 52-week or all-time lows, with the stock of Nikola – once valued more than Ford Motor – trading for less than $1 per share. That puts the company at risk of being delisted from the Nasdaq, which executives are attempting to avoid through a reverse stock split that needs to be approved by shareholders.
Shares of Rivian are off about 56% this year but remain the healthiest of high-profile EV startups, most of which (other than Rivian) went public via special purpose acquisition companies, or SPACs, in the last five years.
Lucid’s stock has traded under $8 for most of the past year. The shares closed Thursday at $2.70, down more than 60% in the last 12 months.
Other EV startups such as Lordstown Motors and Electric Last Mile Solutions have gone bankrupt, while Fisker is on the verge of filing for bankruptcy and has paused vehicle production.
Lesser-known Canoo is scheduled to report its first-quarter results Tuesday. Tony Aquila, Canoo CEO and executive chairman, during the company’s fourth-quarter investor call last month said the company needs to continue to raise capital and cut costs.
“We have seen a very difficult market. We have adapted our disciplined capital deployment approach by raising only the amounts of capital we need for each milestone, and we will continue to do so,” he said.
— CNBC’s Michael Bloom contributed to this article.

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Sherry House, who previously worked at electric-vehicle maker Lucid Motors, will join Ford in early June and transition into the chief financial officer role in early 2025.
In the meantime, current CFO John Lawler will continue in his position and take on the role of vice chair.
The move comes as Ford amps up its focus on electric vehicles.

Ford’s Chief Financial Officer John Lawler and Linda Zhang, chief engineer for the company’s All Electric F-150 Lightning, participate in the opening bell ceremony at the New York Stock Exchange, April 28, 2022.
Brendan Mcdermid | Reuters

Ford Motor on Friday named the former chief financial officer of electric-vehicle startup Lucid to replace its current CFO, who is being promoted to closely oversee the company’s ongoing turnaround plan, the company said in a press release. 
The ex-Lucid executive, Sherry House, will join Ford first as finance vice president in early June. In that position, she’ll be working to transition into the CFO role by early 2025, according to the release.

In the meantime, current CFO John Lawler will continue in his position while expanding his role to become vice chair.
Lawler has been CFO since October 2020. During this time, he helped build the company’s Ford+ turnaround plan to make Ford more efficient and profitable as the company worked to expand current operations and invest billions in electric vehicles.
Ford has faced years of inflated warranty costs, including $1.9 billion in 2023. The company last year said it has a $7 billion to $8 billion annual disadvantage compared with traditional rivals due to production costs, quality issues and other operational inefficiencies.
The move comes as Ford ramps up its focus on electric vehicles. The automaker’s U.S. sales jumped 10.5% in February 2024 compared with sales in February 2023, thanks to increases in its all-hybrid and all-electric vehicle sales. The results included an 81% jump in all-electric vehicles. 
“Make no mistake, EVs are coming, EVs are part of the future,” Lawler told CNBC back in February.

Still, the unit is not yet profitable. As part of its 2024 guidance, first released in February, Ford said it expected its EV business to lose between $5 billion and $5.5 billion this year.  
House served as CFO at Lucid Motors for nearly three years until last December. Over that time, the company went public, started producing and delivering its luxury EVs, and opened manufacturing plants in the U.S. and Saudi Arabia. She’s also held roles at Alphabet-backed autonomous-driving technology company Waymo and General Motors.
“Sherry adds an important leadership dimension to Ford as we urgently build a profitable EV business, generate new and recurring revenue streams, and create a more dynamic and resilient company,” Ford President and CEO Jim Farley said in the release. 
Ford reorganized its operations in 2022, splitting EVs and legacy autos into two separate units to streamline the growing EV business and maximize profits.

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Novavax has signed a multibillion-dollar deal with French drugmaker Sanofi to co-commercialize the company’s Covid vaccine starting next year.
Part of the deal allows Sanofi to use Novavax’s Covid shot and flagship vaccine technology, Matrix-M adjuvant, to develop new vaccine products.
The licensing agreement will allow Novavax to lift its “going concern” warning, which it first issued in January 2023 due to having “substantial doubt” about its ability to continue operating.

A health worker prepares a dose of the Novavax vaccine as the Dutch Health Service Organization starts with the Novavax vaccination program on March 21, 2022 in The Hague, Netherlands.
Patrick Van Katwijk | Getty Images

Novavax on Friday said it has signed a multibillion-dollar deal with French drugmaker Sanofi to co-commercialize the company’s Covid vaccine starting next year and develop combination shots targeting the coronavirus and the flu, among other efforts. 
Shares of Novavax spiked 120% in premarket trading Friday from their previous day close of $4.47 apiece.

The licensing agreement will allow Novavax to lift its “going concern” warning, which it first issued in February 2023 due to having doubts about its ability to continue operating, Novavax CEO John Jacobs told CNBC in an interview. 
It marks a turning point for the struggling vaccine maker and its protein-based Covid shot. Health officials view the vaccine as a valuable alternative for people who don’t want to take messenger RNA jabs from Pfizer and Moderna. 
Part of the deal allows Sanofi to use Novavax’s Covid shot and flagship vaccine technology, Matrix-M adjuvant, to develop new vaccine products. Sanofi will pay Novavax an upfront payment of $500 million and up to $700 million in payments for development, regulatory and launch milestones.
That total is roughly double Novavax’s current market cap of $627 million. 
Novavax is also entitled to royalty payments on Sanofi’s sales of its Covid vaccine and combination shots targeting coronavirus and the flu. Novavax will also receive additional launch and sales milestone payments of up to $200 million, along with royalties, for each product Sanofi develops with Matrix-M adjuvant.

Under the deal, Sanofi will also take a less than 5% stake in Novavax. 
“It really does help our business. It keeps us well capitalized, it takes the going concern off, it gives us the chance to pivot our strategy more towards what we’re best at — to bring additional value to all of our stakeholders, including our shareholders,” Jacobs told CNBC. 
The deal also will help the company fulfill its mission of improving global public health with its vaccine technology platform “at a pace and a scale that we could have never done if we kept it all to ourselves” due to a lack of resources, capital and scope, Jacobs said. 

Stock chart icon

Novavax shares spike on Sanofi deal.

Deal terms

Novavax will lead the commercialization of its Covid shot for the rest of this year and will transfer most of that responsibility to Sanofi in 2025. Sanofi won’t oversee commercialization in countries that Novavax has existing partnership agreements with, including India, Japan and South Korea, along with nations with advanced Covid vaccine purchase agreements with the company.
Jacobs said Sanofi, as a large pharmaceutical company, could increase the market share and presence of Novavax’s Covid vaccine, which will broaden patient access to the shot. 
The deal also allows Sanofi to develop products that combine its flu shot or other in-house vaccines with Novavax’s Covid jab. Sanofi can also use Novavax’s Matrix-M adjuvant to develop new vaccine products. 
Notably, Sanofi will be solely responsible for the development and commercialization of any combination shot containing its flu vaccine and Novavax’s Covid shot. 
“Through this agreement with a world leader like Sanofi, not only in commercialization but also in development, we believe that this multiplies immensely the opportunity to bring forth multiple new vaccines much more quickly,” Jacobs said. 
Outside of the deal, Novavax expects to start a late-stage trial on its own combination vaccine targeting Covid and the flu and its stand-alone flu shot later this year. Previously, Novavax said that trial would only include the combination vaccine. 
“Now our phase three trial, that we’re on track to initiate in the second half of this year, won’t just have one potential licensable vaccine should we succeed, but it will have two,” Jacob said, noting the deal “frees up costs” and “opens up our own organic pipeline.” 

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Art auction sales at Christie’s, Sotheby’s and Phillips over the next two weeks are expected to total $1.2 billion, down 18% from a year ago, according to ArtTactic.
Dealers and art experts say the auction art market is stalled over price.
While the spring sales typically have more than a dozen works offered for more than $30 million each, this year there are just a few.

A version of this article first appeared in CNBC’s Inside Wealth newsletter with Robert Frank, a weekly guide to the high-net-worth investor and consumer. Sign up to receive future editions, straight to your inbox.
The key May art sales at major auction houses are expected to be down from last year, as wealthy buyers and sellers take a breather from the frenzied prices of 2021 and 2022.

Art auction sales at Christie’s, Sotheby’s and Phillips over the next two weeks are expected to total $1.2 billion, down 18% from a year ago and nearly half the total for the May 2022 sales, according to ArtTactic.
It extends a recent decline for the art market from its post-Covid peak, when cheap money, a booming stock market and fiscal stimulus saw record sales. Last year, global auctions of fine art fell 27% from 2022 — the art market’s first contraction since the start of the pandemic in 2020 — and the average price dropped 32%, marking the biggest decline in seven years, according to ArtTactic.
During the first quarter of this year, sales in the contemporary and postwar category — the big money maker and growth driver for the art market in recent years — plunged 48%, according to ArtTactic.

The auction houses say demand from buyers remains strong. The problem, they say, is supply, as collectors hold back on selling their trophies for a better market environment. This spring, there are also no big single-owner collections up for sale, like the Macklowe Collection or Paul Allen Collections that helped power sales in previous years.
“We’re seeing what people perceive as a smaller offering this season,” said Brooke Lampley, global chairman and head of global fine art at Sotheby’s. “The proof is in the pudding. It’s the buyers showing up and what the work will sell for that will define our perception of the art market right now. And I expect the results to be strong.”

Price pressures

Dealers and art experts say the auction art market is stalled over price, with sellers not willing to get a lower price than they might have gotten at the peak of the market in 2021-2022. Buyers, meanwhile, are demanding discounts due to rising interest rates, an uncertain election year and geopolitical uncertainty.
“Sellers want 20% more, and buyers want 20% less,” said Philip Hoffman, CEO of the Fine Art Group, an advisory and art finance firm. “There is a stalemate.”

CNBC’s Robert Frank before an Andy Warhol and Jean-Michel Basquiat collaboration at Sotheby’s.
Crystal Lau | CNBC

Dealers say today’s buyers don’t have the confidence they had two or three years ago: Persistent inflation, higher interest rates, fears of a slowing economy, the upcoming elections and geopolitical crises are all causing many collectors to pause their buying.
“People feel hesitant,” said Andrew Fabricant, chief operating office at Gagosian, the mega-gallery and dealership. “It’s an election year, there is the situation with the Fed, are they going to cut or not. The cost of money is relatively high compared to a few years ago.”
Even buyers who have the cash and are willing to pay aren’t buying, because there is a dearth of top-level art coming up for auction, according to experts.
“Our clients have have a ton of cash,” Hoffman said. “The question they’re asking is, ‘Should we buy in to the art market right now?'”

Fewer pieces

While the spring sales typically have more than a dozen works offered for more than $30 million each, this year there are just a few.
The most expensive works this auction season include Francis Bacon’s 1966 “Portrait of George Dyer Crouching,”— part of a series of 10 famous and monumental portraits Bacon did of Dyer between 1966 and 1968. It’s selling at Sotheby’s for an estimated $30 million to $50 million.

(L-R) Jean-Michel Basquiat’s “The Italian Version of Popeye has no Pork in his Diet,” 1982, and Francis Bacon’s “Portrait of George Dyer Crouching,” 1966.
Crystal Lau | CNBC

Sotheby’s also has a collection of four paintings by Joan Mitchell, with two expected to fetch over $15 million.
Christie’s is featuring a large work by Brice Marden, who died last year, called “Event,” estimated at $30 million to $50 million. It also has an iconic 1982 work by Jean-Michel Basquiat, called “The Italian Version of Popeye Has No Pork In His Diet,” estimated at $30 million.
Yet collectors and art advisors say there are few if any “masterpiece” works to create excitement this season.
“They just don’t have the marquis material this season,” Fabricant said. “Unless you have something truly singular and special, I don’t think you’re going to have the same enthusiasm you had in past sales.”
At the same time, art experts say now is a good time to hunt for bargains given the long-term prospects for the art market.
“I do think if you can get deals with pre-2022 prices and if there is something of good quality, now is the time to buy,” Hoffman said. “My outlook for the art market for next 10 years is that it will be a fabulous investment. It’s a great time to buy, not the best time to sell.”
While auction sales are weak, sales in the private markets and galleries remains strong, advisors say. Sales of new works in galleries are less dependent on investment returns, and are therefore less susceptible to economic and stock-market volatility. The auction houses are also seeing strong growth in their private sales, where they broker a deal directly between buyer and seller without a public auction.
Christie’s sold a Mark Rothko painting to hedge fund billionaire Ken Griffin earlier this year for more than $100 million, CNBC previously reported. Collectors say selling a trophy work privately carries less risk of a failed auction, which can damage a work’s value.
“With private markets, you can be very targeted in terms of who you’re approaching, what type of buyer you’re approaching,” said Drew Watston, head of art services at Bank of America. “You can be very targeted about the price that you’re going out and asking for in the market. There’s great discretion so you can kind of go out into the market and test a price and adjust depending on the feedback that you get.”
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Moderna said the Food and Drug Administration has delayed the approval of its vaccine for respiratory syncytial virus to the end of May due to “administrative constraints” at the agency.
The FDA was expected to make a decision on the RSV shot on Sunday.
The agency has not informed Moderna of any issues related to the vaccine’s safety, efficacy or quality that would prevent its approval, the biotech company said in a release.

Nikos Pekiaridis | Lightrocket | Getty Images

Moderna on Friday said the Food and Drug Administration has delayed the approval of its vaccine for respiratory syncytial virus to the end of May due to “administrative constraints” at the agency.
The FDA was expected to make a decision on the RSV shot on Sunday. The agency has not informed Moderna of any issues related to the vaccine’s safety, efficacy or quality that would prevent its approval, the biotech company said in a release.

Investors are watching the upcoming approval closely as Moderna tries to rebound from the rapid decline of its Covid business last year. If cleared, the RSV shot would become the company’s second product to launch in the U.S. after its once-blockbuster Covid vaccine. It would also be the third RSV vaccine to enter the market after shots from Pfizer and GSK rolled out last year.
Moderna said its RSV vaccine is still on track to be reviewed by an advisory panel to the Centers for Disease Control and Prevention during a meeting on June 26 and 27. That panel will vote on recommendations for the shot’s use and intended population, which is necessary before it enters the market.
Moderna has been testing the shot in older adults, who are more vulnerable to severe cases of RSV. The virus kills between 6,000 and 10,000 seniors every year and results in 60,000 to 120,000 hospitalizations, according to CDC data.
“Moderna is very grateful to the FDA for their continued efforts and diligence,” said Dr. Stephen Hoge, president of Moderna, said in a release. “We look forward to helping the agency complete the review of our application, and to the June [advisory] meeting.” 
The approval would demonstrate the versatility of Moderna’s messenger RNA platform beyond treating Covid. The biotech company is using that technology to tackle a range of diseases. Those include RSV, cancer and a highly contagious stomach bug known as norovirus. 
Investors have high hopes for the long-term potential of Moderna’s mRNA product pipeline: Shares of the company are up more than 20% this year after falling nearly 45% in 2023.

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Shareholders at Boyd Gaming, Bally’s Entertainment and Caesars Entertainment will put on the ballot at the respective casino companies proposals to force them to study the costs associated with permitting smoking indoors.
Boyd, Bally’s and Caesars collectively operate 75 U.S. casinos that permit indoor smoking, where state law allows.
Advocates for smoking bans point to research by C3 Gaming that concluded smoke-free casinos generate more revenue and outperform competitors that allow smoking.

A new strategy has emerged in the battle to ban smoking in casinos: the shareholder vote.
Shareholders at Boyd Gaming, Bally’s Entertainment and Caesars Entertainment will put on the ballot at the respective casino companies proposals to force them to study the costs associated with permitting smoking indoors.

The proposals are sponsored by Trinity Health, a nonprofit health care network, and the Americans for Nonsmokers’ Rights Foundation. Trinity Health, based in Livonia, Michigan, has used its shareholder status to fight for various health initiatives despite the fact that it owns just a tiny fraction of these companies. For example, public records show Trinity owns just 440 shares of Bally’s stock, or about 0.001% of the company.
Boyd, Bally’s and Caesars fought to keep the proposals out of the proxy materials distributed to shareholders. The Securities and Exchange Commission denied the casinos’ requests, and the proposals as well as the rationale behind them were delivered to all shareholders.
Boyd will face a vote over a smoke-free assessment at its annual shareholder meeting Thursday. Bally’s holds its annual meeting on May 16, and Caesars will follow with its own meeting, likely in June.
The three companies collectively operate 75 U.S. casinos that permit indoor smoking, where state law allows. About 14 states permit indoor smoking in commercial casinos.
States like Nevada and New Jersey have prohibited indoor smoking more broadly, but carved out exceptions for casinos. Legislation to end indoor smoking at casinos is in various stages in several states across the country, including New Jersey, Pennsylvania and Rhode Island.

Advocates for smoking bans point to research by C3 Gaming that concluded smoke-free casinos generate more revenue and outperform competitors that allow smoking.
Proposal sponsors argue shareholders should know how much casinos pay in higher health insurance premiums for employees, greater maintenance costs and keeping away customers who hate the smoke.
In its proxy, Boyd argues it’s seen a negative impact in states that banned indoor smoking. It argues these decisions are best left up to the properties to follow local trends and says if shareholders succeed in implementing a ban (which Boyd claims is the true goal in forcing an assessment), the company will lose customers to competitors who continue to allow smoking.
Caesars board member Jan Jones Blackhurst said Wednesday at the SBC Summit North America, an online gaming conference, that she believes the decision of whether to ban smoking in casinos should be left up to governments. She pointed out that experience has shown that smoke-free casinos can take an economic hit.
“Generally, if you look across the United States, when casinos prohibit smoking, revenues fall anywhere from 20% to 25%, which also then have a huge layoff factor with people starting to lose their jobs,” she said.
Unions are mixed in their responses. While some worry about the potential of job losses, the United Auto Workers, which represents more than 10,000 table game dealers across the country, has ramped up its efforts in the fight against in-casino smoking, citing secondhand exposure for employees.
The Centers for Disease Control and Prevention says “no amount of exposure to secondhand smoke is safe and the only way to fully protect nonsmokers from secondhand smoke is through 100% smoke free indoor air environments.”
The U.S. Surgeon General says that many common practices found in casinos such as separating smoking versus non-smoking sections, cleaning the air and ventilating buildings are not effective protections against secondhand smoke.
Casino operator Parx, which runs locations in Pennsylvania, decided to stay smoke-free during the Covid pandemic at its property in Bensalem, north of Philadelphia. It competes with four other local casinos that allow smoking indoors, but said it hasn’t seen its market share suffer.
“Financially, we know we’ve lost some customers, but we also know we’ve gained some customers. We don’t think we’ve seen a significant impact either way,” Parx spokesperson Marc Oppenheimer told CNBC.
Instead, the company said it focuses on guest satisfaction scores and surveys that indicate a boost to employee morale.
In Las Vegas, MGM Resorts opened the first casino resort on the Strip to prohibit indoor smoking and even smoking on the pool deck. On its website, the property declares, “Here at Park MGM, we’re not afraid to be different and, as you may have noticed, we’re all about what’s fresh. Now, that includes the air you breathe. ”
For now, Park MGM is the exception, but smoke-free advocates hope soon, it’ll be the rule.

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