The arrival in New York state of new full-action casinos like the Rivers Casino & Resort in Schenectady will only spread existing gambling revenue thinner, threatening the existence of other casinos, a respected rating agency warned this week.
The caution came from Moody’s Investor Services, which said the Northeast gambling market is already oversaturated, before eight new casinos, including the one in Schenectady, open. They are all expected to open by 2018, Moody’s said.
The Rivers Casino on the shores of the Mohawk River is one of four new live-gaming casinos expected to open in New York state and the only one in the Capital Region. Schenectady officials foresee it as a regional attraction and the catalyst for a lot of new economic activity once it opens, currently projected to be in 2017.
Moody’s released a report called “Northeast Casinos Face Rising Tide of Competition,” concluding what many people in the gaming industry already realize.
“It will be difficult for the new casinos entering overcrowded markets to gain share as existing operators have been cutting costs and paying down debt in anticipation of the new supply,” the report states.
Moodys noted that new casinos in Pennsylvania, Maryland, Delaware and New York have hit Atlantic City particularly hard, with four casinos there closing in 2014.
Industrywide, casino revenue has been flat in recent years, Moodys noted.
“The fact regional gaming revenues excluding Nevada remained flat, despite further improvements in the economy and additional regional casinos throughout the U.S., is a strong indication that U.S. consumers will continue to limit their spending to items more essential than gaming,” wrote Moody’s Senior Vice President Keith Foley in a 2014 report.
The Rivers Casino, a $330 million project of Rush Street Gaming of Chicago, is currently awaiting a license from the state Gaming Commission. It would have 1,150 slot machines and 66 table games, along with a steakhouse and other amenities. About 1,200 jobs are expected to be created.
Also awaiting licenses are the Montreign Resort Casino in Sullivan County and the Lago Resort in Seneca County. Tioga Downs in Tioga County is also seeking a license, despite being rejected in the first round of review.
The licenses were once expected to be issued by the end of the year, though that now looks less likely, but not impossible.
“We are moving as expeditiously as possible,” Gaming Commission spokesman Lee Park said Friday. “We are doing a thorough review.”
Park said the Gaming Commission, as a regulatory agency, wouldn’t comment on the economics of the gambling industry.
But those in the industry are well aware of the threat more competition could bring.
The video-lottery terminal casino at Saratoga Casino and Raceway is building a hotel and launched video blackjack in response to the pending competition in Schenectady.
The Oneida Indian Nation, which owns the Turning Stone Casino, is urging state officials to reject the license for Lago Resort. It has launched a television campaign against the Lago proposal, saying it would cost jobs at Turning Stone.
There are five Indian casinos already operating in the state, of which Turning Point is the closest. In draws thousands of people from the Capital Region.
The New York Gaming Association represents the nine racinos in the state, including Saratoga Casino and Raceway.
“Anytime more gaming supply is introduced into the market, it leads to operational challenges,” said James Featherstonhaugh, president of the Gaming Association.
“Our nine members continue to work with the Gaming Commission and Legislature to improve our competitiveness in the marketplace, ensuring we continue to deliver revenue for education and New York’s racing industry, along with maintaining the current workforce levels,” Featherstonhaugh said. “We continue to outperform the other states in the Northeast.”
A spokesman for Rivers Casino & Resort declined to comment on the Moody’s report.
Moody’s suggestion to investors, apparently not tongue-in-cheek: Bet on casino equipment makers, not casinos.
“The new casinos will be ordering some 20,000 new slot machines,” said Peter Tromnetta, a Moodys analyst.