A year after its opening in Pittsburgh, new River’s Casino has attracted mixed reactions. According to Standard and Poor’s Rating services, Rivers Casino is falling short of its own revenue projections. The official revenue figures of this casino are not able to meet those estimates which had been set by the state Gaming Control Board, rating agencies and industry watchers. The casino’s fortunes for investors are tracked and kept in account by Standard and Poor which has marked the downgrade in the North Shore casino’s debt ratings three times throughout one whole year.
The representative and analyst Michael Listner feels that in comparison with the amount of $800 million spent on the property, the revenues are too meager. He held that this property is one of the most expensive in the state and yet, has not been able to maintain the forefront in gathering revenues. It ranks only fifth or sixth out of nine casinos that are operational at present in the state. Mr. Listner follows Rivers Casino’s affiliate company, Holdings Gaming Borrower LP.
What Casino Officials say
However what the casino leaders and officials say, creates a different picture of River’s Casino. According to them the casino is still able to play more than 2,800 slot machines legally, which is worth noting. Along with the table games which were approved by the state and installed in August 2010, the Rivers Casino is doing well.
The reason given for the shortfall of targeted revenue figures is that casinos take time to get effectively operational. They need enough time to decide upon such matters like the getting the right employees and what total number of workers are required. Todd Moyer, Rivers’ general manager asserts that they are pleased with the business done till now.
Reason behind Property Cost
According to Rivers spokesman Jack Horner, the opinions of rating agencies cannot impact operations of Rivers Casino. Their consultant Christiansen maintains that property maintenance, especially casino upgrades, exercise a strain for any casino. It is therefore advisable for casino owners to spend larger amounts of capital every five to seven years to refresh their properties.
However, contradicting this opinion, Mr. Listner asserted that casino industry owners always try to make themselves the next great property by constantly updating and adding new equipment. According to him, within the span of five years, Rivers’ owners will have to face challenges. What matters most to Standard and Poor is the level of cash flow which is required to meet the debt service and maintenance.
Conclusion
The scenario makes it feasible that casino gaming may have reached the anticipated and feared saturation point. River’s Casino is said to be underperforming. The cash flow issue has been nagging since June 2010, and River’s Casino had to restructure the debt. Although it is not considered as a worse situation, credit rating agencies think otherwise. As stated earlier, Standard and Poor’s Rating services therefore marked the downgrade once since the casino opened last August and twice again after the debt restructuring happened.
In general, the opinion is that Rivers Casino needs to survive in some way. This can be done by either earning much more than it can do at present or then by cutting on costs that involve such matters like payroll, or selective default of debts. But there is no question about the fact that the revenues of this casino are falling much short of what the majority of finance experts and casino industry leaders had expected.