The principal owner of Resorts World Catskills informed a recently appointed special committee to the casino’s board this week that the casino “is at a critical juncture,” given massive losses since its February 2018 opening.
“Despite repeated cash infusions from lenders and equity holders,” an official speaking for Malaysian billionaire K.T. Lim wrote, the casino “has been unable to become financially self-sustaining from revenues from its operations, and does not appear to have any reasonable prospect for becoming financially self-sustaining in the future.”
Lim has invested tens if not hundreds of millions in the $1.2 billion casino, which has barely reached half of the projected $277 million in annual revenues — a malady in common to varying degrees to all four new upstate New York casinos. Losses at the Catskills site were listed by the company at nearly $140 million.
But given the grim reality, Lim’s representative writes, in a filing made available to the U.S. Securities and Exchange Commission, that “at this time, we do not intend to provide further equity or debt financing” for the casino.
The solution, according to Lim, is for his company “to acquire all of the outstanding equity of the company” that it doesn’t already own — meaning, the remaining 14%.
It doesn’t appear that those shareholders have much of a choice, as one gaming expert notes that bankruptcy appears inevitable. Lim has couched his offer, which could be finalized by Nov. 15, as a way to save the casino’s 1,600 union jobs.
Worrisome echoes of a Jersey saga
The financial debacle is reminiscent of Atlantic City’s Revel casino, which opened with great fanfare in 2012 and closed ignominiously in 2014 after a second bankruptcy filing. In the cases of both Revel and Resorts World, there was massive debt that, from the opening month, couldn’t be reduced due to lower-than-expected revenues.
In filings from the first quarter of 2019, for example, the Catskills casino took in revenues of $57.6 mm on operating expenses of $76.24 mm. Its losses were $37.5 mm for the quarter.
The property itself is impressive, with an 18-story hotel, 100,000 square feet of gaming floor space, more than 2,000 slot machines (25% fewer than when the property opened), a 2,500-seat entertainment venue, and the Crystal Life Spa. An indoor waterpark opened in the spring, and a Rees Jones-designed golf course is in the works as well.
But the casino seems to have struggled to attract sufficient New York City, Westchester County, and northern New Jersey potential customers. Resorts World Catskills, near Monticello Raceway — also owned by Lim — is just under 100 miles from midtown Manhattan and about 75 miles from central Bergen County.
Sportsbook delay in Catskills
There’s a sports betting angle here that suggests the company has a lot — too much? — on its plate.
The New York State Gaming Commission gave the green light to those four casinos to offer sports betting last month. A few weeks ago, Rivers Casino in Schenectady and Tioga Downs had their sportsbooks up and running. A spokesperson for the commission told NJ Online Gambling Monday that Resorts World has made an application for a sports betting license, and the commission “is reviewing the application.”
But summer is tourist “high season” in the Catskills (think Dirty Dancing, the movie), so every week of delay in opening the sportsbook costs the casino more money it doesn’t have. Some of those tourists may have found that the addition of a sportsbook to the other gambling options is enough to plan for a return visit in the fall — and also to reach out to family and friends to let them know about their trip.
While the Meadowlands Racetrack is the closest sportsbook for millions, it doesn’t have the added benefit of live-dealer table games, nor does Yonkers Raceway’s racino in Westchester County, which has been left out of the sports betting game so far as well.
And while just over a year ago, some thinking among those in the New Jersey sports betting industry was that summer was a relative wasteland versus the fall college football and NFL seasons, that thinking has changed. Not only has interest in MLB been solid, but in-game betting on all sports has increased.
So Resorts World really could have used the modest bump to the bottom line from a quicker-opening sportsbook.