New York’s del Lago Resort & Casino has gotten another thumbs down from Moody’s Investors Service, which warns that the property may have to restructure its debt in the face of a performance that continues to miss revenue projections.
In a new report, the credit ratings agency lowered the casino’s bond rating and said it was retaining its previous negative outlook.
“Despite a slight pickup in monthly gaming revenue, this improvement is not enough to alleviate Moody’s concern that Lago will be challenged to support its annual fixed charges of about $50 million going forward,” the report said.
del Lago opened in the Finger Lakes region in February 2017 as one of four upstate commercial casinos authorized in 2014 through an amendment to the New York Constitution. All four have struggled to meet their initial projections in a state crowded with gaming options, including several resort-scale tribal casinos, nearly 20 racinos and racetracks and off-track betting.
del Lago, which cost $440 to build, finished its first year with about $147 million in revenue, roughly 44 percent below what it forecast when it won its gaming license.
At that juncture, Moody’s offered a bleak picture of the casino’s finances, which it reiterated in its latest report, saying, “Lago’s ramp-up in terms of gross gaming revenue continues be at a level well below expectations.”
If it continues, Moody’s estimates the casino will not be able to cover its debt and operating expenses, lending credence to speculation among some observers that it may ultimately have to reorganize its finances under the protection of U.S. Bankruptcy Court.
“Without further equity investment of some type—the company contributed about $11 million of cash equity earlier this year as part of a covenant amendment—Moody’s is of the opinion that Lago will require a restructuring that involves some level of impairment,” the agency said.
