As if things aren’t already rough enough for del Lago Casino, now it literally can’t get any credit.
The upstate New York casino is struggling, missing the $250 million revenue projection by a mile. Through November, the property had not even cracked $100 million.
One organization is tired of giving del Lago the benefit of the doubt. Moody’s credit agency recently downgraded del Lago’s credit rating to “negative.”
Moody’s cites lackluster revenues as source of problem
Earlier this month, Moody’s put out a press release about the change in del Lago’s status. In addition to downgrading the $440 million casino, the agency also downgraded the quality of several major loans on the property.
Within the release, Moody’s rep Keith Foley explained the decision:
“Despite the fact that del Lago Resort Casino opened on time and on budget and has substantially grown total gaming revenues generated in its primary market area, the property’s revenue ramp-up is well below Moody’s expectations…Given del Lago’s current performance, Moody’s is of the view that without a substantial improvement in revenue, del Lago will not be able to achieve a level of performance that can support its existing debt capital structure.”
Revenue would be the best way to turn things around for the property. However, the report also suggested a debt restructuring could help the project’s status, particularly when it comes to loan grading.
Competition from Oneida not helping del Lago’s cause
Even though del Lago is the largest of the existing commercial casinos, it arguably fared worse than the rest last year. This year is not much better either.
Shortly after Moody’s release, Auburnpub reported del Lago had its worst week ever. The opening week of 2018, the casino took in $1.88 million in revenue. It was the first time the property ever took in less than $2 million in a week.
Moody’s and others can hope and pray for a revenue turnaround. However, given the competition coming in the next couple of months, that seems unlikely.
First of all, Resorts World Catskills moved up its opening date to Feb. 8, less than three weeks away. The casino will feature 150 table games and 2,150 slots. it is 175 miles away from del Lago, but also positioned significantly closer to Manhattan, which could funnel some competition.
Additionally, it is getting more pressure from its biggest local competition, the Oneida Nation. Del Lago already has to contend with the Oneida’s nearby Turning Stone Casino, which has both an established audience and a more favorable tax scheme.
Now the Oneidas are about to open yet another casino just 50 miles away. The new Point Place Casino in Bridgeport, NY opens on March 1.
The opening of both Point Place and Resorts World isn’t just bad news for del Lago either. Most casino insiders said the commercial casino underperformances stem from oversaturation, so the addition of not one, but two new casinos into the marketplace will be something everyone is keeping an eye on.