Poor Second Quarter for Catskills Casino
The largest new casino in New York is going through a bit of a rocky patch. In an attempt to boost the Catskills economy, the Resorts World Catskills casino has landed in a $58 million debt in the first five months. Interestingly, $37.2 of this debt was accumulated in the second quarter alone. The Catskills casino and the nearby Monticello Raceway- that comes with a harness track and slots, is owned by Empire Resorts which reported these huge losses in the quarterly filings to the SEC for the second quarter.
As of June 30, the company has over $462 million in long-term debts collectively for both its casinos. Empire Resorts also suggested that it may have to raise more capital or take more debt in the upcoming moths. In the filing, the company said that it cannot be sure that its business will generate enough cash from operations alone and that any of its anticipated earnings will be realized. The company also remains unsure whether its new debt agreements will be used to manage its previous debts or handle capital expenditure. It also said that its future economic condition will depend on business, financial and an array of other factors that are not under its control.
The filing has now confirmed the June report of Moody’s Investor Service which had downgraded the rating of Resorts World Catskills because of its falling revenue and increasing risk of defaulting on loans. The firm based its analysis partly on the resort’s shortfall of revenue which was expected to be $250 million but was actually only $150 million. However, the problem is not with this casino alone. The Upstate casino market is currently oversaturated which has led to declining income for many big players, especially the ones with big overheads.
The Resorts World Catskills opened in early February this year with a $1.2 billion budget and is located on the site of the historic Concord Hotel. Since its establishment, the company has consistently added new games, dining options, hotel rooms and a host of other amenities. In fact, it has planned to open a $33 million entertainment venue by the end of December. It also has plans for an indoor waterpark and a golf course, set to be opened in 2019. Executive vice president Charlie Degliomini said that it is too early to judge the success of the resort, especially when it was opened only a few months ago and has several development projects in the pipeline. He said that a realistic qualified analysis will take at least three years.