August 30, 2018

The Update Desk: Casino Gambling

It's almost hard to imagine that I'm able to write - again - on New York's great experiment with casino gambling.

Most recently, in this post, we learned about the downgrading of del Lago's rating by Moody's, and it's accompanying gloomy outlook that del Lago is not viable without some restructuring, and in this post, we learned that del Lago and at least one of the other new casinos was looking for a better tax deal from the state. (These are just two of several posts I've done on this subject over the past four or five years.)

And then, just a couple of weeks ago, we got news that the newest, the biggest of the four approved casinos (please, don't let them build any more of the darn things!) is also in a bit of a pickle.

It seems that Empire Resorts, which built the new Resorts World Catskills casino, lost over $58 million in the first five months it was open. The company also owns the Monticello Raceway, what we here in NY call a 'racino' as it has both harness racing and slot machines. According to the company's SEC filing from June 30,
We cannot be certain that our business will generate sufficient cash flow from operations, that our anticipated earnings from the Casino will be realized, or that future borrowings will be available under our existing debt arrangements or otherwise to enable us to service our indebtedness or to make anticipate capital expenditures... Our future operating performance and our ability to service our debt will be subject to future economic conditions and to financial, business and other factors, many of which are beyond our control. 
As it did with del Lago, Moody's downgraded Resorts World Catskills' rating.

Now, I know the language used in SEC filings is almost as carefully crafted as a Hollywood script or a politician's concession speech, but you can see that they're struggling with cash flow and debt, the same as del Lago and Rivers. Tioga Downs, in the Southern Tier, may be doing a little better.

The latest article notes that 'informal' requests for help from the state, the ones made by del Lago and Rivers, were rejected.  And it has a link to another article that proves what most of us knew all along, and what the experts have been saying for a couple of years: the upstate market is over-saturated with gambling opportunities.

How so, you say? Well, take a look; in addition to the four new  under performing Vegas-style casinos, we have
  • seven Nation owned casinos
  • six racinos (including Tioga Downs and Vernon Downs, which has had its own issues)
  • one thoroughbred track
  • 120 Off-Track Betting locations and
  • three Nation-owned electronic gaming locations
Add in the ready availability of online gambling, and legalized sports betting (likely coming to New York in the near future), and it's hard to imagine anyone would think we're over-saturated, right?  

Time will tell whether all those things that are beyond the control of the casino owners will turn in their favor or turn against them like a bad hand of cards. What remains important is that we taxpayers aren't called upon to bail them out. 

After all, while the local casinos are happy to show us pictures of their lucky winners, we never see any pictures of people the casinos bailed out after a losing streak.

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