A leading credit rating agency has downgraded del Lago Resort & Casino and changed its outlook from "stable" to "negative" as the Seneca County gaming facility continues to fall short of revenue projections nearly one year after it opened.
Moody's Investor Services lowered del Lago's corporate family rating from B3 to Caa2 and downgraded the probability of default rating from B3-PD to Caa2-PD. The agency also downgraded the first and second lien term loans for the casino.
When Moody's first rated the casino, del Lago projected about $250 million of net revenue in its first year of operations. But reports submitted to the state Gaming Commission show del Lago is on pace to fall short of that estimate by more than $100 million.
Through the first 11 months since del Lago opened, the casino has reported $136.2 million in gross gaming revenue. After taxes, the casino's net revenue is more than $95 million.
"Given del Lago's current performance, Moody's is of the view that without substantial improvement in revenue, del Lago will not be able to achieve a level of performance that can support its existing debt capital structure," said Keith Foley, a senior vice president at Moody's.
While the casino's financial performance was a factor in Moody's decision to downgrade its ratings, competition within central New York was also considered. With several competitors in the region, Moody's said it "may impede the company's ability to support its capital structure."
One of del Lago's top competitors is the Oneida Nation, which operates Turning Stone Resort Casino in Verona, Oneida County, and Yellow Brick Road Casino in Madison County. The tribe announced this week that it will open its third gaming facility, Point Place Casino, in Madison County near the Onondaga County line. The casino will open March 1.
The Moody's rating wasn't the only negative financial news for del Lago.
New state Gaming Commission reports show del Lago had its worst weekly performance since opening last February. From Jan. 1 to 7, the casino's gross gaming revenue was $1,886,542. It is the first time the casino's weekly gross revenue dipped below $2 million.
Del Lago's monthly financial report for December indicates that the casino's gross gaming revenue was $11,180,468 — its second lowest monthly total since opening in February.