It hasn’t been a good year at the largest commercial casino in upstate New York. Rather than Resorts World Catskills filing for bankruptcy, a sale has been negotiated.
The sale of the remaining stake in the casino to the Malaysian company that already owned 86% of the business is little more than a Band-Aid, however. In order to turn the business around, changes will have to be made.
What led up to the Resorts World Catskills sale?
In a filing to the US Securities and Exchange Commission, Empire Resorts stated that it lost $73 million in the first six months of this year. Empire also reported the company has over $400 million in outstanding debt.
In fairness to the Catskills casino, Empire’s debts and losses haven’t all been its fault. Empire also owns the Monticello Casino and a raceway by the same name.
In further defense of Resorts World Catskills, it just had its best month of the year so far. The $15.3 million in July was not only a bump up from June of this year but an increase from July 2018, as well.
The recent uptick in revenue likely played a part in motivating the majority owners to buy the company’s remaining shares. It’s also likely they didn’t want to see their investment wither away.
Malaysian owners and taking the company private
The Kien Huat/Genting group will soon be the sole owner of Empire Resorts. The sale, which should be finalized in the fourth quarter of this year, went for $9.74 a share.
It isn’t certain how many shares were sold, but the price was reportedly 15% higher than the prior quoted value of the stocks. That allowed stockholders to cut their losses and let the Genting group have its way.
The new sole owners are taking the company off the exchange. They face reducing the company’s debts and turning the properties into profitable ventures. That’s going to require more than simply throwing money at the problems, however.
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An uncertain path forward for Resorts World Catskills
Resorts World Catskills could experience a revenue boost soon. It’s currently one of the only places in the Empire State where legal New York sports betting will take place once the casino’s sportsbook opens.
The other New York casinos that are already operating sportsbooks have seen a slight revenue bump. A slight bump isn’t going to fix Empire Resorts’ problems, however.
Like any other business that is running in the red, the immediate task is to see how expenses can be cut. Whether that will involve laying off staff or reducing employee benefits remains to be seen.
The other usual solution is to increase revenue. That will likely include expanded or new marketing along with new approaches to providing services to customers. Simply increasing customer costs is another way, though an unpopular one.
If the owners decided to introduce new amenities or rebrand parts of the casino, that’s going to be a further investment on their part. As the old saying goes, however, it takes money to make money.
Despite all the uncertainty, what’s certain is that the Genting group believes it can turn Resorts World Catskills around. The owners have put their money where their mouth is, but the task they face might require a significant restructuring of the business.