Horseshoe Casino Baltimore ended the year with December revenues skidding 32% from a year earlier, according to statistics released by Maryland’s Lottery and Gaming Control Agency.

With capacity limited to 25% and its restaurants closed under Mayor Brandon Scott’s Covid-19 restrictions, last month’s revenues were $12.7 million.

That’s the lowest monthly yield since Horseshoe opened in August 2014, hailed by then-Mayor Stephanie Rawlings-Blake as an economic “game changer” for Baltimore. The casino was closed between March 16 and June 28 at the onset of the pandemic.

A gaming industry analyst interviewed by The Brew estimates that Horseshoe needs a revenue stream of about $20 million a month to stay economically viable over the long run.

Short term, Horseshoe’s owner, CBAC Gaming LLC, took a beating from the economic crisis triggered by the pandemic.

The consortium’s share of gambling dollars fell by $60 million (-42%) over the last year, from $143 million in 2019 to $83 million in 2020, state records show.

Moody’s Investors Service has downgraded the company’s debt to Caa2, defined as poor quality with a negative outlook, in part because of its “single-property, geographically-concentrated gaming operations, high debt/EBITDA relative to its scale of operations, and competition” from other casinos.

It noted that the company drew down its $15 million revolving credit facility, resulting in negative free cash flow for an uncertain time period, and faces both a high risk of a covenant violation and a probability of default.

The casino is majority owned by Caesars Entertainment and Jack Entertainment. Minority shares are held by racetrack owner Stronach Group, affiliates of Baltimore investor Theo C. Rogers and Towson Row/Stadium Square developer Caves Valley Partners. CBAC does not disclose financial information to the public.

Lagging Behind

As Baltimore’s only casino, which operates 24 hours a day on the 1500 block of Russell Street, Horseshoe continues to suffer far greater revenue hits than its competitors, who are bound by the same 25% capacity and social-distancing restrictions.

Live! Casino in Anne Arundel County reported a 17% revenue decline last month from December 2019, while MGM National Harbor in Prince George’s County dropped by 22%, according to state records.

Once approaching Live! Casino in size and scope, Horseshoe currently takes in less than one-third of its revenues, in part because Live! (formerly known as Maryland Live) has added gaming venues and built hotel space.

Ripple Effect

When it was opened six year ago, Rawlings-Blake promised that its revenues would reduce the city’s property tax rate, pay for the construction of schools and recreation centers, enhance public safety and bankroll community projects.

Since then, the $14 million that Horseshoe pays in annual ground rent has chiefly gone to maintain the city’s Targeted Homeowners Tax Credit. A 10% slice of the proceeds, or $1.4 million, is dedicated to school construction.

Local Impact Grants generated by the casino and the Pimlico Race Track have declined from $7.6 million in fiscal 2019 to $5.3 million in fiscal 2020, according to the city department of finance. Much of the money is used for police patrols and sanitation services focused around the casino.

Other funds go to local communities through the South Baltimore Gateway Partnership, which has bankrolled an array of small projects as well as provided seed money for a re-imagining of the mostly derelict Middle Branch waterfront.

Recently, the grants were used to pay for hand sanitizers, N95 masks and meals provided by the Maryland Food Bank.

Cash-short Education Fund

The casino’s contribution to the state Education Trust Fund (ETF) has also slumped drastically.

In 2019, $71 million was earmarked from Horseshoe revenues. In 2020, that amount dropped to $45 million (-36%).

Last June, the ETF faced a first-ever deficit after Maryland’s six private casinos were temporarily closed to slow the spread of the virus.

Set up in 2008, the fund was supposed to be the big financial winner when Governor Martin O’Malley promoted expanded casino gambling to voters.