Cash-strapped del Lago Resort & Casino in Finger Lakes, New York is seeking a tax cut from state lawmakers after missing its first-year gaming revenue goal by $100 million. Casino owners confirmed Tuesday that they have reached out to the Capitol to ask for assistance, but they did not specify the exact nature of the help they were seeking.
However, it is believed that the casino is looking to have its tax on gaming revenue lowered a little over a year after it opened doors.
Del Lago pays a 37% tax on annual revenue from slot machines and 10% on revenue from table games. Tom Wilmot, principal owner of the $440-million hotel and casino resort, told media on Tuesday that they are able to pay the bills now and for now. However, they will need help from the state in the long term.
Del Lago generated gaming revenue of $158.4 million during its first year of operation, not just failing to reach its $260-million goal but also missing it by over $100 million.
The casino resort was one of four properties of this kind to open doors in Upstate New York in the period between December 2016 and February 2018. Their construction and launch were authorized back in 2013, when the state legalized commercial casino gambling, and in 2015, when the New York State Gaming Commission issued the necessary gaming licenses to the preferred candidates.
While the four properties were hoped to quickly turn into an economic boon for their host municipalities and the region as a whole, many analysts warned that they might not be able to attract new sources of revenue and would cannibalize patrons and proceeds from each other and from existing gambling venues in Upstate New York instead.
Reasons for del Lago’s Failure to Meet Revenue Projections
A spokesperson for the casino resort told media on Tuesday that its financial state was the result from the creation of a a “blatantly unfair competitive” regional market. He went on to say that the Seneca Nation of Indians which stopped making gaming revenue contributions to the state last year has been using the money to offer greater incentives to casino patrons.
The Senecas operate three tribal casinos in the state. The tribe used to pay New York around $110 million each year under a 2002 compact. The Senecas stopped making payments in 2016, claiming that their agreement had expired and they were not longer obligated to contribute a portion of their gaming revenue. The state disputed the tribe’s claims and the two parties agreed to arbitration last fall.
Del Lago owners argued that the Senecas are using the money they have been withholding from the state since 2016 to lure customers with better promotions and incentives. According to officials at the ailing commercial casino that strategy has been working well for the tribe’s casinos, but has created an unfair and highly competitive marketplace.
A recent Moody’s report warned that del Lago needed “substantial improvement in revenue” or it would not be able to support its debt capital structure in future.
Del Lago is not the only commercial Upstate casino to be seeking a tax cut from the state. It has recently become known that Rivers Casino, which, too, launched in February 2017, has reached out to state lawmakers, requesting better tax conditions.
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