The opening of Rivers Casino & Resort in Schenectady and a second new casino in central New York has helped state gaming revenues but hurt their closest competitors in an already crowded regional gambling market, according to a new analysis by Moody's Investors Services.
The credit rating agency, which headlined its report "Cannibalization of gaming revenue continues in the Northeast," said the opening of Rivers last February has led to a decline in revenue for the Saratoga Casino Hotel in Saratoga Springs, which offers video lottery gaming and live harness racing, but doesn't have the live table games available at Rivers.
The report reflects what critics of New York state's efforts to promote casino gaming said would happen if casino gaming was expanded. Within barely a year's time, three full casinos have opened upstate, in competition with each other and with eight video lottery casinos, all of which have opened in the last 15 years. Until 2001, horse racing and non-profit organizations' games of chance were the only legal forms of gambling in New York state, if Native American casinos are excluded.
Del Lago Resort Casino, near Seneca Falls, opened just a week earlier than Rivers, and has fallen short of revenue projections to the point where Moody's on Jan. 10 downgraded the credit rating of its owner, Lago Resort and Casino LLC, due to its debt.
Rivers has also fallen short of revenue projections, but it doesn't have any publicly traded debt and is not rated by Moody's. A number of observers in recent months have noted that the casino has fallen short of initial revenue projections provided to city and county leaders.
"Despite ramp-up challenges, del Lago and Rivers have taken a big chunk of gaming revenue from their closest competitors," the report said.
"This trend, where newcomers are stealing share from incumbents, is consistent with what has been occurring throughout the U.S. gaming markets, particularly in the Northeastern portion of the U.S.," it continued. "We expect this to continue in the eastern part of upstate New York, where another large casino, Resorts World Catskills, is scheduled to open."
Resorts World, which was to open in March, last week announced plans to open on Feb. 8, several weeks ahead of schedule.
Since del Lago opened, the report found that Finger Lakes Gaming and Vernon Downs both saw 14-15 percent revenue drops, while there's been an unknown impact on Turning Stone Casino in Verona, since the Oneida Nation casino isn't required to publicly disclose any information.
In the Capital Region, the Saratoga Casino is Rivers' primary competition. "The opening of Rivers Casino had a material negative impact on its closest competitor, Saratoga Springs, which is located about 25 miles north of Rivers," Moodys concluded.
Through the first nine months of its operation, the report found Rivers generated $117 million in gross gaming revenue, while Saratoga's gross gaming revenue, over 12 months, dropped 14 percent, from $168 million to $144 million.
Before Rivers opened, Saratoga Casino officials acknowledged their business could be hurt, and the opening of a new luxury hotel in 2016 was in large part a response to the pending competition. Saratoga Casino did not respond to a request for comment.
The $1.2 billion Resorts World facility will change the equation again. Moody's said it expects that "Rivers will experience some negative impact once Resorts World opens."
While Resorts World, in Monticello, will be the closest New York casino to the New York metropolitan area, Moody's expects it, too, to struggle, given the number of establishing gaming competitors in New York, New Jersey and Connecticut.
"Similar to the challenges facing del Lago and Rivers, the success of Resorts World relies on growing the gaming market and attracting players from the existing competitors," Moody's said.
A spokesman for Rivers Casino & Resort said the facility declined comment.