Resorts World Catskills: Financial struggles grow for new casino, report shows
It's opening day at a Resorts World Catskills, a new $1.2 billion casino, Feb. 8, 2018.
ALBANY — Resorts World Catskills, the $1 billion casino that opened in February, incurred a $58 million loss in the first six months of the year, including $37 million in the last three months.
Recent financial disclosures by the casino’s owner, Empire Resorts, to the U.S. Securities and Exchange Commission shows the depth of the financial woes facing the new casino that is hoped to be a boon for the once-thriving tourist region.
The casino had a slow start for its soft opening in the middle of the winter, and it has been expecting revenue and visitors would ramp up this summer.
But the quarterly filing Aug. 7 suggested the company continues to brace for a tough financial road as it adds amenities, including a new entertainment village and golf course, as well as an adjacent waterpark.
Empire Resorts wrote it cannot be "certain that our business will generate sufficient cash flow from operations, that our anticipated earnings from the Casino will be realized, or that future borrowings will be available under our existing debt arrangements."
The company added it may need to raise additional capital or take on more debt "to finance our plans for growth and general corporate purposes."
Resorts World Catskill Casino holds their grand opening.
Financial help continues
In June, the casino got a $30 million loan from Kien Huat, the realty arm of the Lim family. Empire Resorts is owned primarily by billionaire KT Lim, the chairman of the Malaysia-based Genting, the worldwide gaming giant.
"Our future operating performance and our ability to service our debt will be subject to future economic conditions and to financial, business and other factors, many of which are beyond our control," Empire Resorts wrote to investors, which was first reported by The Times Herald-Record.
The financial picture painted in the quarterly report is not surprising.
Resorts World Catskills is the largest of the four upstate New York casinos that started opening in 2017, but it has been the worst performing one, the USA Today Network's Albany Bureau reported in June.
It's net win per day — which is the money left in its slot machines after payouts to winners — has averaged a mere $103 per machine, which is well below the other New York casinos.
Although it had a few stronger weeks so far this summer, the casino is still in pace to produce about $140 million in annual revenue in its first year -- about half of what it initially projected, state records show.
The performance led Moody's Investors Service in June to downgrade the bond rating of Montreign, the subsidiary of Empire Resorts that operates the casino.
"Without a significant near-term improvement in revenue, Resorts will be challenged to support its annual fixed charges going forward," Keith Foley, a senior vice president at Moody's, said in a statement.
A brighter future?
Chares Degliomini, the casino's executive president, said the casino and its 18-story hotel are doing well as the facility builds a clientele and adds new amenities.
The entertainment village with 100 hotel rooms, dining and retails stores is set to open in December, while the rebuilt golf course on the old Concord Hotel site is scheduled to open next year.
The Kartrite Hotel & Indoor Waterpark will open in early 2019.
He said New York chose the project to be a catalyst to revive the struggling Catskills economy, not because it would produce the greatest revenue.
“By every measure of why we were selected for a casino license, we are a success," Degliomini said. "We have already created over 1,600 new jobs and will have 2,200 once the entire campus is activated."
Resorts World Catskills also noted it is exploring its options to add sports betting, which it is allowed to do under state law after the U.S. Supreme Court legalized sports betting in May.
"Today we are the prime reason that this region is experiencing unprecedented prosperity. Our majority shareholder continues to express confidence," said Degliomini, pointing to the recent $30 million loan from Lim.
The casino already has a sports bar equipped to turn into a sports book.
The state Gaming Commission is expected to release regulations later this year to allow the four upstate casinos to allow sports betting.
Earlier this month, the company hired the Moelis & Company, a Manhattan-based financial advisor, to explore its online gaming and sports betting opportunities.
"There is tremendous opportunity for our company in the sports book space," Degliomini said.