The Seneca Gaming Corp. reported a quarterly loss of $82.7 million in its latest filing with the Securities and Exchange Commission, the first quarterly loss since the gambling operation began in 2002, when it opened its first casino in Niagara Falls.
Corporation officials blamed most of the loss on a write-off of $109 million in stalled construction projects, including the long-delayed Buffalo Creek Casino and Hotel and suspended improvementsto gambling facilities in Niagara Falls and Salamanca.
In addition, gambling revenue declined $15.5 million in the three months ending June 30 when compared with the same time last year, a drop of 10 percent. Gambling revenues dropped $12.6 million, or 12 percent, at the Seneca Niagara Casino and Hotel, and they declined another $4.5 million, or 11 percent, at the Seneca Allegany Casino and Hotel, the report noted.
The one bright spot was a $1.6 million increase, or an 18 percent spike, in gambling revenues at Seneca Buffalo Creek.
To capitalize on that, the report notes that the Seneca Nation of Indians offered earlier this month to loan $9 million to Seneca Gaming. The loan would be used to expand the temporary casino to add another 250 slot machines to the 244 machines already on line.
Seneca Gaming has not yet accepted the loan offer, made at a 5 percent interest rate.
The gambling operation has drastically cut costs since the economy started siphoning off its steady flow of customers, part of a nationwide slump in gambling revenues.
The Seneca casinos earlier cut their work force by 5 percent, froze executive salaries and reduced the amount of money paid to the Seneca Nation in the form of head leases for the casino properties.
But it was the $109 million write-off that did the most damage to the gambling operation’s bottom line in this quarter.
Catherine Walker, Seneca Gaming’s chief operating officer, did not return a telephone call to comment on the report.
But a corporation lawyer, James Domzalski, confirmed the operating income loss and said the majority of that was because of the write-off. He said corporation officials would have more details in a call with financial analysts.
The report noted that on Aug. 27, 2008, construction was suspended at Seneca Allegany Casino and Hotel, as well as the Seneca Buffalo Creek Casino and hotel. Officials cited the recession, unfavorable interest rates for expansion and demands on casino cash, including payments to the Seneca Nation.
Planning efforts on adding to the Niagara Falls Casino and Hotel also were suspended at the same time.
Seneca Gaming wrote off $87 million for the Buffalo operation, $18 million for Salamanca and $3.5 million for Niagara Falls.
The gambling operation, owned by the Seneca Nation, said it has had recent discussions with nation officials to further reduce the amount of money Seneca Gaming provides to the Senecas.
The tribal council withdrew an earlier request for $20 million for capital improvements, and the monthly payments to the nation were reduced in March from $4 million to $3 million. Another $5 million given to the nation for capital improvements was returned, and there is a $5 million reduction in rent for the three casinos.
The SEC report also noted that the Seneca Gaming Authority, the self-regulating arm of the casino operations, has recommended fines of $1 million for Seneca Gaming and another $8 million in fines to 11 of its employees.
The authority issued notices of violation for an infraction on April 3, when $25,971 in gambling chips were left on a table and were then mixed in with chips from other tables.
Seneca Gaming is contesting the charges and said there was no net revenue lost, a claim it said was backed up by its auditors, PricewaterhouseCoopers.