We’ve seen the writing on the wall for months now. Barely a year after it opened with high expectations and much fanfare, del Lago Resort and Casino is having trouble staying afloat.
The Seneca County gaming facility has finally acknowledged that its first-year revenue shortfall is indeed more serious than they wanted us to believe. And now, the casino’s executives have the gall to ask New York taxpayers to bail them out.
Last week, one of del Lago’s representatives was in Albany to ask state legislators for financial assistance amid state budget negotiations. To be precise, the owner was requesting the state grant the casino a tax break of $14 million.
Del Lago, which opened in February 2017, produced in its first year about $147 million in revenue, which is about $100 million less than it predicted when applying for its casino license four years ago. It is one of the four new Las Vegas-style state-run casinos that have opened across upstate New York in the last 15 months — all of which have seen revenues fall shorter than what was projected.
While the rest of us have been watching the house burning from the outside, del Lago’s owners have been sitting inside screaming back “no, everything is fine!”
The Associated Press reported back in November that del Lago’s first-year revenue was nowhere near what it hoped it would be. In January, Moody’s Investor Services downgraded the casino’s credit rating from stable to negative, making it clear that the $440 million casino has had trouble paying off its debts. Casino owners and representatives from the New York State Gaming Commission maintained through all of these reports that the new gaming facilities would need about three years to get on their feet and that first-year revenue amounts weren’t a good measurement for their success. Requesting a state bailout after just 13 months in business would suggest otherwise.
While it may not be surprising that del Lago is now crying for help, it is surprising what the casino is crying foul over. A del Lago spokesman put the blame on the Seneca Nation, who run several casinos of their own in western New York, saying the regional casino industry has been tilted toward the Indian tribes because they haven’t been making their required payments to state and local governments.
So not only did del Lago owners not realize the house was on fire for a long time, but now they don’t realize where the fire started.
Analysts aren’t blaming the Seneca Nation for del Lago’s troubles, at least not them alone. Upstate New York’s gaming market has suddenly become oversaturated in recent years with so many casino and casino-like facilities opening up. Indeed, when Turning Stone in Vernon opened 25 years ago, it was the only land-based casino in the entire state. Now, there are seven of them along a 100-mile stretch of the thruway between the Greater Rochester area and Albany, with several other gaming facilities nearby.
In other words, the state gaming industry is cannibalizing itself, where each new casino that opens ends up stealing customers from the others, hurting business for all of them.
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Supply and demand — the most basic principle of economics — was not hidden from view when del Lago jumped on the casino bandwagon. Its location in the town of Tyre put it smack in the middle between competition from the Senecas to the west and Oneidas to the east. The other state-run casinos nearby — Tioga Downs in the Southern Tier, Rivers Casino and Resort in Schenectady and Resort World Catskills in the Hudson Valley — would also obviously pose a business threat.
The owners knew all of this and gambled anyway. And now that they’re losing that bet, they want New York taxpayers to pick up the tab.
Fortunately, a bailout for del Lago was scorched by regional assemblymen and senators, calling the proposal “unacceptable” and “absurd,” among other things. Gov. Andrew Cuomo, who championed the state’s casino expansion initiative in 2014 that created del Lago, said “I don’t want to get into the business of bailing out private concerns.”
That’s very interesting, given that just last spring Cuomo authorized state bailouts for Vernon Downs — a harness track and racino with video lottery terminals in Oneida County — as well as Saratoga Casino Hotel, both of which cited competition from nearby gaming locations for their falling revenue.
And as it turns out, Cuomo’s dismissal of rescuing del Lago appeared to be short-lived, as state Senate Majority Leader John Flanagan told reporters that providing financial assistance to the casino was, in fact, part of budget negotiations over the weekend.
Although no relief package came out of it, it’s unlikely that del Lago will simply give up trying, especially if the casino’s track record continues on its present course.
And if and when the state agrees to bail out a virtually brand new casino like del Lago, other struggling locations will undoubtedly run to Albany, looking for their handouts too.
Actually, that’s already happening. Rivers Casino and Resort in Schenectady, which also opened in February 2017, is also seeking a financial bailout. And while it just opened last month, reports say Resort World Catskills is generating even less revenue than both del Lago and Rivers got during their openings last year.
All of this is just the latest sign that New York’s bet on casinos as an economic stimulus is not paying off. The same casinos that were advertised as cash cows are now short on cash. The same governor who assured us that the state “is not putting in a penny” to these casinos now has his government working to give them tax breaks.
Most damning, this is another sign that the owners of these casinos have little interest in gambling with their own money, and have no problem gambling with yours.
Luke Parsnow is a digital producer at CNY Central (WSTM NBC 3/ WTVH CBS 5/ WSTM CW6) and contributing writer at The Syracuse New Times in Syracuse, New York. You can follow his blog “Things That Matter” and follow his updates on Twitter.