The long-awaited sports betting lounge that opened at the west end of the XL Center in downtown Hartford could end its fiscal year in June with a deficit of as much as $750,000.
The 5,000-square-foot sports bar and gambling hall off Ann Uccello Street opened Sept. 9 as part of the $15 million XL Center renovation package.
Since then, it has posted a deficit of $284,100 through December and will be in the red by $600,000 to $750,000 by the end of the fiscal year, according to Joseph Jemia, chief financial officer of the Metropolitan Development Authority. It is expected.
Jeremiah shared his predictions at a CRDA board meeting Thursday afternoon. The CRDA is an economic development agency that oversees, among other things, the city's sports and entertainment sectors.
The XL Center itself already runs an average annual deficit of $2 million, and officials argue the money is needed to maintain an entertainment venue vital to the capital's vitality.
The Connecticut Lottery Company predicted that the CRDA would be able to “offset” expected losses from sports bars through wager receipts, but “we have not seen such amounts achieved here.” said Jeremiah.
So far, the sportsbook has generated $18,000 in net profit, which is turned over to the CRDA, Jeremiah said.
CRDA Executive Director Michael Freimas, speaking after Thursday's meeting, said sportsbooks are facing challenges due to changes in betting providers, which is causing a slowdown in activity. He said marketing for the sports betting lounge has not yet begun in earnest.
Freimas said CRDA expected to lose about $400,000 in the first year as sports bars and gambling lounges gain traction.
“Really, this is a new startup,” Freimas said. “It takes time to establish itself.”
Freimas pointed out that sports bars and lounges have value beyond receipts. Officials have long planned to add amenities that would open the west end of XL Center to the street, making a bar/lounge an attractive option when shows or games are in town.
“You can’t go to the sportsbook on game day,” Freimas said. “It's full. The problem is after 3pm on a Tuesday when the traffic is non-existent. He has to operate this facility on a 12-hour basis for seven days.”
Freimas said the CRDA is planning a complete overhaul of food service at the sports lounge and is also considering other operating changes, including business hours.
Separately, CRDA is working to secure $100 million for a major renovation project at the larger XL Center. State lawmakers approved an $80 million grant. CRDA has a tentative agreement in place to give venue manager Oakview Group a long-term contract to run the event and earn a profit, in exchange for contributing $20 million toward renovations.
Under the agreement, OVG will incur annual operating losses. OVG officials have expressed confidence that the number of performances at the renovated XL will be dramatically increased. That will increase traffic to the new sports betting lounge.
Mr Freimas said tenders for the XL's major renovations are expected near the end of this month. That will tell him if the project is doable within his projected $100 million budget. If so, a deal with OVG could be done. If not, he said, CRDA “needs to go back to the drawing board a little bit.”
“We'll have a real idea by the end of the month as to how this budget is going to hold up or not hold up,” Freimas told the CRDA board Thursday.
