Moody’s Investors Service warns that the largest of New York’s three new commercial casinos is not generating enough revenue to cover its debt.
del Lago Resort and Casino, located near Syracuse in the state’s popular Finger Lakes tourist region, saw its bond rating lowered in a new report from the debt rating agency.
The $440 million property, which opened last February, is on track to fall shy by $100 million or more of its first first-year revenue forecast of $263 million.
“Moody’s is of the view that without a substantial improvement in revenue, del Lago will not be able to achieve a level of performance that can support its existing debt capital structure,” said Keith Foley, a senior vice president with the agency.
del Lago’s troubles are not unique. Since the debut of full-scale commercial gaming in New York in December 2016, the three operating properties―including Tioga Downs in Nichols near the Pennsylvania border and Rivers Casino & Resort in Schenectady―are missing initial revenue projections by more than $200 million combined, prompting many observers to suggest the state’s gaming market is overbuilt.
Besides the commercial casinos, New York is home to seven tribally owned casinos and eight racinos and machine gaming venues, and there will be more in the next several weeks with the February 8 opening of an even larger and more elaborate facility―Resorts World Catskills―the closest of the four commercial casinos to New York City―and a third casino by the Oneida Indian Nation, slated to open in del Lago’s Syracuse market on March 1.
The Moody’s report noted, “There are five gambling facilities, including four racinos and one Native American full-scale casino within 100 miles of del Lago’s location.”
The situation has raised concerns in Albany, where state Assemblyman Gary Pretlow, who chairs the chamber’s Racing and Gaming Committee, has called on the administration of Gov. Andrew Cuomo to launch an investigation into the realities of the statewide market.
“It is critically important that we have reliable and realistic long-term revenue projections,” Pretlow said, “so we can prevent the recent gaming expansion from creating an arms race for more and more tax subsidies.”
del Lago, owned by Rochester mall magnate Thomas Wilmot, has defended its performance, saying it takes time to build a customer base and pointing to the jobs and economic development it has created in the region.
“From many aspects, del Lago Resort & Casino has been a wonderful success story,” General Manager Jeff Babinski stated last fall.
