Cuomo’s experiment a dud

They’re going to be hurting for revenue in Albany. The Empire State’s three newest casinos have passed their first anniversary and are an aggregate $230 million short of their revenue projections. Yes, they’re generating new revenue (30% according to Moody’s Investor Service) but it’s hard to see the doughnut when the hole is so big. All three casinos succumbed to the Penn National Effect, promising the biggest revenues imaginable. This left them little room for error when cold reality began creeping into the numbers. In this case the shortfall was some 39%. New York State should take this lesson into account when accepting bids on the New York City market a few years hence. “We’re responsible for a huge increase in tourism in the region,” said Del Lago General Manager Jeff Babinski, in defiance of the evidence — a worst-ever performance last month.

Jeff Gural‘s dog-ate-my-homework excuse was that his numbers assumed having the Tioga Downs hotel opened seven months earlier. We all know what happens when we assume. Now he’s betting on a new clubhouse at the golf course to drive revenue. Tioga Downs was 28% of projections, Del Lago 44% and Rivers Casino 37% short. The New York Gaming Commission‘s Brad Malone put the best spin he could on Year One: “With the opening of these three facilities, the state has captured hundreds of millions of dollars of new revenue for localities and education that previously went out of state.”

These numbers of course don’t take into account newly opened Resorts World Catskills, nor the Oneida Indian Nation‘s Point Place project. Warned Moody’s, “In our opinion, commercial casino gaming expansion in the region may provide short-term economic and budgetary gains, but is unlikely to improve state credit quality and may prove a long-term credit risk for states in the region.” New York Gov. Andrew Cuomo (D) might do well to take that lesson to heart.