Just weeks after downgrading New York’s del Lago Casino Resort, Moody’s Investor Services has issued another gloomy report on the Empire State’s casino prospects, warning that next month’s opening of Resorts World Catskills will further “cannibalize” what it describes as a “very tough gaming market”.
The debt ratings agency in its earlier report downgraded its outlook on del Lago to “negative,” saying the largest of the state’s new commercial casinos to date is not growing revenues at a level necessary to handle its debt load.
The new report added to the downbeat assessment, saying “the property’s revenue ramp-up is well below our expectations”.
Del Lago, located in the popular Finger Lakes region in central New York, is one of three non-Indian casinos to open over the last year or so after voters in 2013 gave their blessing to a constitutional amendment permitting the licensing of up to seven commercial casinos. The others are Tioga Downs Casino in the Southern Tier and Rivers Casino Resort in Schenectady.
Del Lago is one of three new non-Indian-owned casinos to open in the last 13 months. The others are Rivers Casino Resort in Schenectady and Tioga Downs in Nichols in the Southern Tier.
Moody’s acknowledges that overall upstate gaming revenues have increased 30 percent since the expansion, from just under $600 million to more than $750 million, most of it came at the expense of existing casinos, whose take fell during the same period. Moreover, revenues have since flattened out, indicating little or no “ramping up” in performance, the report notes. Which isn’t surprising considering the three new casinos currently are falling short of their own first-year projections by more than $200 million combined.
“This flat growth speaks to the broader growth challenges facing even new entrants getting off to a strong start in the region as they have not been able to grow the market enough to avoid a substantial amount of cannibalization as well as meet their ramp-up targets,” Moody’s said.
The report made special mention of the adverse impacts on two upstate racinos―Finger Lakes Gaming in Farmington, near Rochester, and Vernon Downs in Oneida County―noting that since del Lago came on line last February, Finger Lakes’ gaming revenue has dropped by 15 percent and Vernon Downs’ by 14 percent.
“This trend, where newcomers are stealing share from incumbents, is consistent with what has been occurring throughout U.S. gaming markets,” the report states.
As for Resorts World Catskills, which will be largest and most elaborate entry into the commercial market, “unlike del Lago and Rivers” it will have the downstate area to draw from.
“That said,” the report notes, “we expect Resorts World will be entering a very tough gaming market.”
