One of the Edmundston region’s largest employers is considering closing its doors in response to a ballooning debt caused by the pandemic.
The Grey Rock Entertainment Centre is located on the Madawaska Maliseet First Nation and employs about 115 people when fully staffed. It typically draws most of its customers from nearby Quebec and Maine — which have both been completely cut off under COVID-19 travel restrictions.
Owner John Bernard said the business is trapped in an unsustainable revenue-sharing agreement with the provincial government. That has led to a debt that has grown to about $800,000 since the casino reopened in early July.
“Right now, we probably shouldn’t be open because we’re running up our debt,” he said.
Bernard said 65 per cent of revenue comes from customers from outside New Brunswick.
‘Absolute worst case scenario’
As a regulated casino, the operation has revenue-sharing agreements with both the Madawaska Maliseet First Nation and the New Brunswick government.
Grey Rock must pay the First Nation 20 per cent of its revenues and the provincial government 20 per cent.
In addition to the revenue split, the deal also requires lump-sum payments to the province of $44,000 per month — regardless of the casino’s revenue and expenses.
Since opening five years ago, Bernard said the Grey Rock Entertainment Centre has paid $6 million in total to the province under the agreement. There’s about one year left of the monthly lump-sum payments.
Bernard said the pandemic led to a drop in revenue of about 65 per cent, and he is currently not able to cover his monthly expenses, even before paying the province the $44,000.
The travel restrictions have turned the casino halls quiet.
“Absolutely worst case scenario,” Bernard said of the borders closing.
The opening of a new hotel next to the casino did attract some new customers from southern New Brunswick. But that too has come to a halt since the Edmundston region was rolled back to the orange-level recovery phase. Now revenue has dropped even further, about 85 per cent less than normal.
Vaccine a light at the end of the tunnel
The entire Edmundston region has been facing economic challenges during the pandemic.
Its unique geographic position, tucked between Maine and Quebec, means its businesses are reliant on cross-border customers.
Cathy Pelletier, executive director of the Edmundston Chamber of Commerce, said the potential closure of the casino is concerning, but not a surprise.
“It is important to the economic development and the economic situation in our region,” she said. “With that being closed, hopefully it’s going to be for a short period of time.”
The orange recovery phase has also impacted the business community, as non-essential travel is not allowed from other parts of the province.
Pelletier said while visitors from outside New Brunswick can’t come, the U.S. border shutdown has helped some businesses and hurt others.
Some goods such as groceries and gasoline are less expensive across the river in Maine.
“It makes them realize how important it is to stick in your region and to shop local and to buy local,” she said.
Province offers little help
Bernard is asking the provincial government and the Madawaska Maliseet First Nation for help as he tries to avoid closing and laying off the 75 employees who are working right now.
He said the province has offered to defer revenue-sharing payments until March 31, while the First Nation has indicated a willingness to discuss changes to revenue sharing. No break was offered to Grey Rock for the $44,000 monthly payments.
“I really want the governments to come back and act like shareholders and business partners, because we’re in this together,” Bernard said.
A spokesperson for the Finance and Treasury Board confirmed it agreed to defer all payments, except the lump-sum amounts, until the end of the fiscal year on March 31.
“The situation will be reassessed at the end of the fiscal year in the hope that agreement may be reached on a revised payment schedule that would enable the casino to stay open,” Jennifer Vienneau wrote in an email.
Bernard said as things stand, his plan is to try to stay open until New Year’s Day.
“At that point we’re going to have to assess very seriously where we’re at and whether we can remain open during this pandemic,” he said.
The staff has been reduced to about 75 people in response to declining business. But casino regulations require many positions to be filled to keep operations running.
“We’ve done everything we can to stay open, we’ve cut back the hours,” Bernard said. “But understand we cannot cut back on security and surveillance — we’re a casino.”