Pittsburgh’s Rivers Casino received some not so jolly news this holiday season-a credit rating downgrade from Standard and Poor’s. The downgrade from a B- to a CCC amounts to a lump of coal in the casino’s stocking. But the official statement from management is that the reduction "was entirely anticipated". They rationalize the move as one that is affecting the gambling industry as a whole and not indicative of troubles at the North Shore facility. In keeping with the cheeriness of the holiday season the statement further comments the "Rivers Casino is posting market share gains and is becoming a destination of choice for gaming in Western Pennsylvania".
Management is correct in one facet-the downgraded was to be anticipated. As we have been documenting, the slots parlor has not lived up to neither its, nor the gaming board’s, revenue expectations. Through the second week of December the casino is on pace to earn $196 million in annual gross terminal revenues-far below their projection of $427.8 million and the gaming board’s projection of $362.4 million annually.
Of course, with the casino at only 45 percent of expected revenue, many people are worried because the City and region have pinned a lot of hopes on the success of the facility. Not only will the projected community payouts be in doubt-like the $7.5 million per year for the new hockey arena-but the future of the slots parlor itself could be in doubt. And that brings up a whole new set of questions. What happens if the Rivers Casino declares bankruptcy? Remember that one of its owners has already declared bankruptcy. Who takes over the casino and will they be required to pay for the new arena or will a bankruptcy judge relieve them of that obligation? While this is the season of giving, the Rivers Casino may need more than Santa can fit in his sleigh.
