Gambling mecca hits hard times

Inside the casino at Resorts World Catskills in Monticello. The gambling mecca has lost money every quarter since it opened in February 2018, showcasing how New York’s newest casinos are already struggling for survival, as an oversaturated market has cannibalized gaming revenue. Ben Sklar/New York Times

MONTICELLO — It was once thought to be a sure thing, a $1.2 billion gambling mecca that carried long-held hopes of revitalizing the Catskills, and more recent expectations of driving Gov. Andrew M. Cuomo’s upstate development program.

But Resorts World Catskills, roughly 85 miles northwest of New York City, has lost money every quarter since it opened in February 2018, dragged into the red by a combination of underwhelming attendance and nine-figure loans.

Last month, the largest stockholder of Empire Resorts, the company that operates the casino, argued that it should go private because it no longer believed it had “any reasonable prospect for becoming financially self-sustaining in the future.”

The company’s most recent filing with the Securities and Exchange Commission showed a $36 million loss in the second quarter of 2019, after a $37 million loss in the first three months. The company warned that it may seek bankruptcy protection if it does not secure financing.

Things had gotten so bad that Empire Resorts successfully petitioned the New York state Gaming Commission to reduce the number of slot machines required on its gaming floors, a move that would artificially increase the casino’s win per unit — a key barometer for casinos.

But Resorts World Catskills is far from alone in feeling the pain: All four of the state’s newest casinos have underperformed expectations, swamped by competition in an already-saturated gaming market.

The same challenge has faced casinos across the country, as states attracted to the promise of tax revenues and jobs have engaged in a kind of brinkmanship that divides already-served markets into smaller and smaller pieces.

“In the early days, it was build it and they will come, and that worked for a long time,” said Alan Woinski, a gambling industry analyst and consultant. “That was great when you only had a casino in every other state. Now it’s like a war.”

By the time New York opened its first full-fledged casinos, the state already had five tribal casinos (including Akwesasne Mohawk Casino Resort in Hogansburg) and more than a half-dozen so-called racinos, which offer slotslike video lottery terminals at racetracks.

“None of this is a shock,” said Harold L. Vogel, a longtime gambling industry analyst. “We know that there are so many states that have legalized different forms of gambling. And New York state, in particular, was late to the game.”

New York has also been slow to embrace sports wagering; although casinos are allowed to take sports wagers, the state has not authorized mobile betting — a method that has helped propel New Jersey past Nevada in sports betting handle.

Cuomo, a third-term Democrat, has repeatedly defended the gaming expansion as a no-cost-to-the-state way to provide much-needed jobs, both in construction and the facilities themselves.

Those promises have largely held true, with significant caveats: The construction jobs were temporary, and many casino jobs are low paying, with dealers making a statewide mean salary of about $35,000 a year, according to the State Labor Department.

“We did the casinos in upstate New York, not because it was the greatest industry in the world, but because upstate New York’s economy’s been suffering for decades,” Cuomo said in a radio interview last month. “The casinos have brought thousands and thousands of jobs to upstate New York and invested billions of dollars.”

State officials have talked about the millions poured into state and local tax coffers as a result of the expansion, in addition to $171 million in license fees paid by the four new casinos. The casinos pay a tax of anywhere from 37% to 45% on slots revenue, as well as 10% on revenue from table games like craps and roulette.

The state’s seven tribal casinos pay lower rates, and the owners of the new casinos have actively lobbied lawmakers to lower their own rates. That inequity has been particularly vexing for casinos in Western New York, where the Seneca tribe has been in a protracted legal dispute with the state and has refused to pay any revenue for more than two years.

Competition also continues to increase, both in terms of locations and options for gaming. In late June, a $2.6 billion casino opened in Boston, and last August, MGM opened a casino in Springfield, Mass., just 60 miles from New York’s eastern border.

Casino officials are still hopeful that mobile sports wagering will be permitted in New York; some state lawmakers suggest that it will be a top priority in January, when the next legislative session starts.

“We are very optimistic,” said state Sen. Joseph P. Addabbo Jr., D-Queens, who chairs the Racing, Gaming and Wagering Committee.

New York Times


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