Empire Resorts Lost $462 Million in First Half of 2018

Resorts World Catskills Revenues

Resorts World Catskills has had similar financial struggles to Del Lago Resort and Rivers Casino in Schenectady, but Empire Resorts has the financial resources to substain losses while it build a customer base.

Empire Resorts, the owner of Resorts World Catskills and Monticello Raceway, reported to the U.S. Securities & Exchange Commmission that it lost $58 million in the first five months of operation. Resorts World Catskills opened in February 2018, but has faced similar struggles to Del Lago Resort and Rivers Casino Schenectady.

In the second quarter of 2018 alone, Empire Resorts lost $37.2 million.

The casino group had $462 million in long-term debts at the time of its filing on June 30. While the debts include numbers for both the brand new Resorts Casino Catskills and the much smaller Monticello Raceway, the lion’s share of the debt was incurred building Resorts Casino Catskills (formerly Montreign).

In its SEC filing, Empire Resorts warned regulators that it faces challenges and will need to raise more cash. In fact, it might need to take on even more debt to make the changes needed to turn around the business.

Empire Resorts SEC Filing

The filing stated, “We cannot be certain that our business will generate sufficient cash flow from operations, that our anticipated earnings from the Casino will be realized, or that future borrowings will be available under our existing debt arrangements or otherwise to enable us to service our indebtedness or to make anticipated capital expenditures.”

Empire Resorts continued in it submission to the federal overseer, “Our future operating performance and our ability to service our debt will be subject to future economic conditions and to financial, business and other factors, many of which are beyond our control.”

The use of the term “other factors” might raise some eyebrows in the New York State Legislature. In March 2018, the owner of Del Lago Resort said that New York lawmakers needed to give his casino a tax break in order to keep the casino solvent.

Thomas Wilmot Wants Casino Bailout

Thomas Wilmot, the New York State businessman who owns the Del Lago Resort, said, “We’re paying the bills. Long term, it isn’t going to be sustainable without some help.”

Thomas Wilmot‘s comment sparked outrage from New York officials and New York voters alike. The call for a bailot spurred Gov. Andrew Cuomo to say, “The upstate gaming casinos are private concerns.”

“They bid, they made an investment, and some of them will say they are not doing as well as they hoped or would have expected. But they’re private concerns, and I don’t want to get into the business of bailing out private concerns.”

New York State Assemblyman Gary Finch compared the comments, made in late-March, to an early April Fool’s Day joke. Finch said, “If this wasn’t such a serious matter, I would’ve thought this was an early April Fool’s Day joke. Asking hardworking families to bail out a casino would be absolutely unacceptable…The paint on this place isn’t even dry, and they want a bailout? It’s absurd.”

State Sen. Joseph Griffo (R-Rome), who later said Wilmot wants a $14 million bailout, said the request was “disturbing”.

What Are Other Factors in NY Casino Market?

Yet Empire Resorts seemed to be implying much the same when it stated “economic conditions” along with “financial”, “business”, and “other factors”. Since economic conditions cover large-scale economics, financial factors include banking and financing, and business factors include the day-to-day management and marketing strategies, there are few other factors which would affect the bottom line.

Still, Resorts World Catskills has a lot more capital behind it than Del Lago Resort does. Empire Resorts will not need a bailout anytime soon.

The Resorts World Casino opened in February 2018 in the city of Thompson near Monticello in Sullivan County at a price of $1.2 billion. The casino was built in the Borscht Belt area of the Catskill Mountains and was expected to bring jobs and investment cash to the region.

Genting Group’s Role in Resorts World Catskills

After several investments over the years, Genting Group subsidiary Kien Huat Realty Sdn Bhd owns 88.7% of Empire Resorts. Kien Huat is the investment wing of Genting. Unlike Thomas Wilmot, Empire Resorts should have the deep pockets to substain losses until Resorts Casino Catskills turns a profit.

Genting also owns Resorts World New York City (at Aquaduct), along with Resorts World Sentosa in Singapore, one of the most lucrative casinos in the world. Genting also is building the $4.1 billion Resorts World Las Vegas, a landmark integrated resort that will be the most expensive casino in the history of the Las Vegas Strip when it opens in 2019.

Genting Group is a multinational conglomerate with many other resorts and hotels around the world. Resorts World Manila in the Philippines has a similar licensing deal to Resorts World Catskills, where another ownership group pays to use the name and receive management support from the Malaysian company. Genting also owns oil platforms in the Indian Ocean and rubber plantations throughout Southeast Asia. It is a massive global enterprise owned by the family of the late legendary Malaysian entrepreneur Tan Sri Lim Goh Tong. Lim Goh Tong’s son, Tan Sri Dato Seri Lim Kok Thay, currently runs the corporation.

Genting Group’s New York Investments

In the long run, Empire Resorts should be able to sustain the losses in order to build a long term customer base. Genting is worth over $60 billion and has the resources to invest in whatever upgrades would be needed to draw customers. Genting already has a New York casino license, so state regulators are comfortable with their ownership.

Alongside Caesars Entertainment, Genting placed a bid for a casino in Orange County, but the New York siting panel which decided not to place a casino that close to New York City. Though obviously the Catskills resort is not as lucrative as the Orange County license Genting originally sought. Genting, which also sought a South Florida casino, has a global database of customers and knows the world casino economy, so it projected Resorts World Catskills as a success.

New York State Casinos

It might be that the New York casino market is saturated, as the state already has multiple tribal casinos (Seneca Gaming, Senaca Niagara, Turning Stone, Yellow Brick Road) and commercial racetracks throughout Upstate New York. State officials have been hesitant to build casinos in the New York City area, because they want to encourage New Yorkers to visit the upstate resorts to help the job market in those areas. That means New York residents often visit out-of-state casinos in Connecticut, New York, and Pennsylvania.