A recent report by credit rating agency Moody’s has examined the impact of casinos in upstate New York. As WAMC’s Southern Adirondack Bureau Chief Lucas Willard reports, the word used to describe the casino ecosystem is “cannibalization.”
Moody’s Investors Service says New York state gambling revenues have increased 30 percent in the last year. The growth was driven largely by the opening of the Del Lago resort in the Finger Lakes Region and the Rivers Casino at Mohawk Harbor in Schenectady.
But as new casinos are built, existing casinos are suffering.
Keith Foley is an analyst with Moody’s.
“The New York gaming market, like a lot of other markets in the Northeast United States, is reaching or has reached the saturation point,” said Foley.
That could make things difficult for new casinos on the way, both in New York state and just beyond its borders.
According to the report, Del Lago and Rivers have taken a “big chunk” of revenues from their nearest competitors, Finger Lakes Gaming and Vernon Downs.
Just 25 miles up the Northway from Schenectady, the Saratoga Casino Hotel in Saratoga Springs, which has undergone an expansion that includes a hotel and a rebranding in recent years, saw a double-digit drop in revenue.
Rivers opened in February of 2017. Since the opening of Rivers, Moody's says Saratoga Casino Hotel saw gross gaming revenues based on a 12-month basis fall from $168 million to $144 million, a 14 percent difference.
A spokesman for Rivers declined to comment on the Moody’s report. Messages left for a Saratoga Casino Hotel spokeswoman were not returned.
The Moody’s report also points out that casino revenues have fallen below expectations. In Schenectady, local officials had lofty expectations for tax revenues from the casino and development at Mohawk Harbor.
Speaking in October 2015, more than a year before the Rivers Casino opened, Mayor Gary McCarthy predicted the revenues from the facility would have a large impact on city finances.
“And then as Mohawk Harbor comes online, the casino comes online, with a high degree of confidence I can say that next year we would look for — in 2017, not 2016 — see roughly a 10 percent cut in local property taxes across the board."
Contributions at the casino site did help contribute to a fiscal year 2017 budget with a 4 percent tax cut, and a fiscal year 2018 budget with a 1 percent tax decrease.
Taxes in Schenectady County stayed flat in 2017, then dropped by 1 percent in 2018.
Though revenues from Rivers were below projections, Schenectady County Legislature Majority Leader Gary Hughes says the project, including all the surrounding development and 1,100 new jobs, is a net positive.
“The casino I think has been a win for Schenectady County. Could it have been a bigger win? Possibly. But a win is a win.”
Todd Garofano, President of the Saratoga Convention and Tourism Bureau, said the losses at Saratoga Casino Hotel were not as bad as the 40 percent decrease expected.
“So according to the report we just saw, we’re at a 14 percent now and while we don’t want to see any losses, 14 is certainly better than 40,” said Garofano.
While revenue dipped at Saratoga Casino Hotel last year, overall the county saw perhaps its biggest tourism draw ever.
Saratoga County Chamber of Commerce President Todd Shimkus…
“We continued to see more people coming to and staying, spending time in our hotels and restaurants and shops. And the other thing we know is the hotel occupancy taxes collected by Saratoga County, again outside of the city, was at a historic high over the last year. So the county has never collected as much money as they did in 2017.”
Nevertheless, the chamber plans to form a committee this year to study recreation and tourism markets that have room to grow in Saratoga Springs and Saratoga County, as there are a lot of new hotel rooms to fill.
The Resorts World Catskills Casino in Monticello, New York is set to open in February. Keith Foley of Moody’s says its location 90 miles from New York City makes it more likely to compete with casinos in neighboring states than Saratoga and Schenectady. New casinos are expected to open soon in western Massachusetts and Connecticut.
But it’s perhaps the economy that might drive the most traffic to casinos. When recreational dollars are scarcer, Foley says, things could get uglier between casinos.
“Here you’ve got these big brick-and-mortar boxes that if revenues decline for any reason, especially if the economy goes down – we all know that consumers are sensitive to the economy and they will cut gaming spending if the economy is hurting – they can’t just get up and move their product. They really have a large, fixed cost that they have to deal with. So it could get nasty from a promotional standpoint and from an earnings standpoint as well.”
Note 1/27/18: The text of this story was updated to add more detail about revenue figures.