30-second summary
- Four commercial casinos in New York report poor revenue figures for 2018
- Struggles continue due to their poor location
- They are calling for tax breaks to give them a boost
- Hopeful that sports betting will become legal and help get more customers in the door
Problems abound in New York
Four casinos in upstate New York got their licenses in 2015. The figures for their 2018 financial performance were recently released, showing that they are still falling short of their revenue targets.
The casinos in question are the Resorts World Catskills Casino, the Rivers Casino Schenectady, Tioga Downs, and the del Lago casino. In their first year in business, they also did not hit their targets.
Many people wonder why the go-ahead was given for four commercial casinos are in the middle of nowhere. This, of course, is one of the main reasons for their poor performances.
One of their big gripes is that the tribal casinos that they are competing with pay less of their slot machine revenue in taxes. The table games at both tribal and commercial casinos are subject to a 10% tax. However, the primary source of revenue for casinos is slot machines, which have different rates of taxation in tribal and non-tribal casinos.
That’s why some of the commercial casinos have long been calling for a tax break from the government. They want to keep 10% of the tax. The Rivers Casino would spend this money on marketing to attract more people.
Not hitting targets
Tioga Downs did not even hit the low end of its target in its first year of operation, missing it by 25%. It was the first of these commercial casinos to open doors, in December 2016. The revenue target was $31-38m (£24-29.5m) for its first year, but the actual revenue was only $23.3m (£18.1m). The casino did have a better year in 201 but still reached only 72% of its revenue target.
Rivers Casino and Resort fell short of the low end of its 2017 target by 33%. It opened in February 2017 and had almost $46m (£35.7m) in tax revenue for the year, compared to projections of $69-86m (£53.5-66.7m). It was the leading performer in 2018, with revenues up 19% to $152.5m (£118.3m) but that was still below projections for the year.
Del Lago Resort and Casino was the second of the casinos to open, on February 1, 2017. Tax revenue of $59-$76m (£45.8-59.0m) was expected in its first year. However, it managed only $44m (£34.2) in taxes, on revenues of almost $146m (£113m). Revenues increased by only $2m (£1.6m) in 2018, which was only 57% of projections.
Moody’s Investor Service warned Del Lago that it needs to restructure its debt levels. Charges are a fixed value of $50m (£38.8m) a year. Failure to restructure will result in default on the debt.
The casino was already warned about this matter in January 2018, when the property was rated “negative” by Moody’s, mainly because revenue fell short of projections by $100m (£77.7m) in its first year in operation.
Resorts World Catskills was the last of the four casinos to open. The casino, which cost $1.2bn (£0.9b) to build, began operations on February 8, 2018. In 11 months of operation in 2018, revenue reached only half their projection of $277m (£215m).
It is clear that these casinos face major problems.
Any hope in sight?
These commercial casinos will continue to struggle unless some changes are made. There is hope that if sports betting becomes legal in the state, they can boost their revenues. This seems likely to happen in the next year or two.
Another major positive would be if they can offer online gambling. This would also help them to overcome their main problem, which is being based in the middle of nowhere. If they could attract online customers from all over the state, revenues would improve considerably. Online gambling is currently not legal in the state, but very well could be in the future.