Upstate New York’s casino market is saturated, according to a report this week by Moody’s Investment Analysis, and it’s about to get worse. Moody’s believes the opening of the Resorts World Catskills will further diffuse what is already a “very tough gaming market” and cannibalize business from nearby racetracks.
The $1.2 billion Resorts World Catskills, a joint venture between Empire Resorts and Malaysian casino giant Genting, is the last of four upstate casinos to open since state residents voted to legalize private, commercial casino gaming in 2013. These new casinos, together with existing racinos and Indian casinos, make up the upstate gaming market.
The hope was that four new casinos, established in four separate regions, would stimulate economic regeneration in these areas. For example, the Catskills’ heyday as a summer vacation resort is little more than a distant memory, and many of the hotels that once thronged with vacationing New Yorkers stand abandoned and derelict.
Due to open on Feb. 8, Resorts World Catskills is being built on the site of the demolished Concord Hotel, the region’s largest from the 1950s until its 1998 closure.
But its three predecessors in the market, the Rivers Casino Resort in Schenectady, Tioga Downs in Nichols, and the del Lago Resort in Seneca County, have reported revenues far lower than projected. And while the new casinos’ presence has grown the market slightly, it hasn’t been not enough to offset the cannibalization of other operators, Moody’s says.
The report from Moody’s, a highly respected financial analyst firm, made several assertions that could cause concern.
“Del Lago and Rivers have taken a big chunk of gaming revenue from their closest competitors, Finger Lakes Gaming and Vernon Downs. These two casinos are located in the central portion of upstate New York, with Rochester and Syracuse as the primary feeder markets,” the report explained.
“This trend, where newcomers are stealing share from incumbents, is consistent with what has been occurring throughout US gaming markets.“
The report offered quantitative examples, noting that since del Lago opened, Finger Lakes Gaming’s gross gaming revenue dropped 15 percent, from $129 million to $100 million over 12 months. And similarly, Vernon Downs’ gross gaming revenue declined about 14 percent, from $37 million to $32 million.
The analyst believes that Resorts World’s success will depend on attracting customers from existing competitors, and notes the Catskills property will have the added advantage of being closer to the New York metropolitan area. Nevertheless, it will be competing for these customers with casinos from surrounding states.
“A significant amount of casino supply already exists within a 200-mile radius of where Resorts World Catskills will be located,” Moody’s explained. “Resorts World Catskills will be competing for customers with other large, established competitors in New York, Pennsylvania and Connecticut.”