Best Michigan casino The Detroit property which is one of three commercial Michigan casinos is planning to increase its debt. Currently, MotorCity Casino has a $15 million revolving credit facility. It will soon move to a $45 million debt structure. This is done to give the business extra financial backup in case of another COVID-19 disruption.
Michigan casinos divide into 23 Indian Tribal casinos and 3 more commercial casinos in the Detroit area. The three Michigan commercial casinos include MotorCity Casino, MGM Grand Detroit, and Greektown Casino.
Revenues of the three Michigan casinos in September fell to 21.7% from monthly revenues in September 2019. Combined revenues for all three was $87.9 million. The casinos operated on 15% capacity due to COVID-related health and safety concerns. In total, commercial Michigan casinos reported in September year-to-date revenue down 48% from September 2019.
In October they reported a slight improvement with revenues of $101.4 million. This includes $7.6 million from sports betting. The Michigan Gaming Control Board (MGCB) also approved the renewal of each license for the next year. But despite the welcomed addition of sports betting that was launched in Michigan in March, Michigan casinos are still struggling.
Along with the other two commercial Michigan casinos (Greektown and MGM Grand Detroit), MotorCity Casino was ordered to close its doors on March 16. This before opening at 15% capacity in early August. The casinos lost more than an estimated $555 million in revenues while being shut down. MotorCity had let go of 2,500 employees at the end of July but reported it was planning to bring back about half of these once reopening. MotorCity Casino President Bruce Dall said the casino’s Gross Gaming Revenue (GGR) in August was 63% compared to August 2019. September revenues increased to 83% compared to last year. And revenues increased further in October.
These difficulties brought MotorCity Casino Hotel to receive approval on Monday last week for debt restructuring. The MGCB held a virtual meeting to vote on the matter. The four board members voted unanimously in favor. Under the new setup, MotorCity Casino Resort in downtown Detroit will move from its current revolving credit facility of $15. The new facility will be for $45 million. Dall said it will give the business ‘extra financial padding’. This will be used in case of another disruption. Like the COVID-19 shut down a few months that affected Michigan casinos earlier this year. “If there were a second closure, we could last over 18 months,” said Dall to meeting participants. “Quite frankly, if things were bad, and it went 18 months, I’d think we’d have bigger issues or problems to deal with,” he added.
MotorCity Casino’s new finance package also includes $570 million combined of a five-year loan and senior unsecured notes. This compared to the previous model that included a $282 million term loan and $200 million in senior unsecured notes. The refinancing comes with the current debt maturing in 2022. Dall said that he was looking to close the deal before the US presidential elections.
Every day that the three commercial Michigan casinos, including the MotorCity Casino, were shut, the City of Detroit lost around $600,000 in gambling-tax revenue. Many other cities and states across the country face this paradigm. And public officials are looking for ways to make up for lost revenues. Over 90% of the casinos in the U.S. reopened, but they all operate at restricted capacity due to COVID-19 safety concerns. As American Gambling Association President Bill Miller said earlier this month: additional financial aid is also needed for the casinos and their workers.
