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New york casinos still struggling; del lago debt crisis looms

New York’s upstate commercial casinos continue to perform below expectations, and one of them is likely facing a debt restructuring just to stay afloat.

This week, the New York Times reported on the 2018 performance of New York’s four upstate commercial casinos, whose licenses were issued in late-2015. The last of the four, Empire Resorts’ Resorts World Catskills, opened to the public in February 2018.
The Rivers Casino in Schenectady was the state’s ‘star’ performer, reporting gaming revenue up 19% to $152.5m in 2018. However, the property didn’t open until February 8, 2017, meaning its 2018 figures had five additional weeks in which to goose the gains. Even then, the 2018 figure is less than three-quarters of what its operators projected while pursuing their gaming license.
Tioga Downs in Tioga Country was also up for the year but it too was delivering only about 72% of its projected revenue. Resorts World Catskills projected its first full-year revenue would exceed $277m by the end of 2019 but the property managed only half that number in the 11 months it was open last year.
The del Lago Resort & Casino in Seneca County reported revenue of $149m in 2018, up only $2m from the previous year and 57% below the property’s original projections. On Thursday, Moody’s Investor Service warned that the property, which also opened in February 2017, would likely have to restructure its debt or default on its annual fixed charges of around $50m.
This is the second time that Moody’s has issued a warning about del Lago’s fate. In January 2018, Moody’s downgraded the property’s outlook to ‘negative’ based on its initial year revenue coming in $100m below projections. Moody’s latest note warned that “without further equity investment of some type … Lago will require a restructuring that involves some level of impairment.”
Some modest help may be on the way if New York regulators issue regulations allowing the state’s casino operators to offer sports betting. The casino legislation the state approved in 2013 included sports betting language and the del Lago property inked a prospective sports betting technology deal with DraftKings last July. It’s now a race to see whether sports betting or the rumored restructuring gets here first.

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