MGM Bridgeport raises concerns
Analysts estimate that the casino market in the area will be saturated in a few years.
US.- Analysts from Fitch Ratings are worried over the fact that there are unanswered questions around the new casino MGM Bridgeport. Whilst it is expected that the state revenue from the new facility will cover for what is being lost from the two existing casinos in Connecticut, the fear of a saturated market still exists.
Colin A. Mansfield, a director of corporate finance at Fitch, said: “The Northeast in general is a pretty saturated market at this point. We’ve seen the number of casinos in the region increase over the last decade.” Nevertheless, close state New York has seen a significant rise in the number of gambling facilities that opened in the last few years, some of them stuck with bad numbers and underwhelming results, but in the end they could be competition for Connecticut’s three casinos.
Marcy Block, senior director of U.S. public finance for Fitch, added: “The state is predicting deficits years into the future and is looking at fairly significant cuts. I don’t know that they can afford to roll the dice on that and think the new casino can provide sufficient compensation for that loss.”
The deal establishes that a US$600 million casino will be built in Bridgeport, the largest city in the state and it will feature 2000 slot machines, 160 table games, a 300 room hotel and a 700 theater as well as restaurants. Moreover, the project is set to create 7k additional jobs in the city.
Whilst the projected taxes from the Bridgeport facility are estimated around US$1.6 billion from 2019 to 2023, analysts said that it’s difficult to judge without knowing at what rate casino earnings would be taxed, local media reported. “Can a commercial casino in Bridgeport make up dollar for dollar what the tribes have been paying? To make the math work, you’d probably have to tax at the high end to make up for lost years of revenue-sharing payments. But if you have a high gaming tax, it discourages investment by the commercial operator. It makes it harder to make the returns pencil out,” added Mansfield.
