The champagne may have to remain on ice for the remaining three operators bidding for a New York casino license, even after MGM Resorts’ abrupt decision to withdraw its New York casino bid appeared to have cleared their path to success.
On the face of it, the trio are vying for three casino licences, making it appear to be an open goal for each candidate.
However, there will still be nervous weeks of waiting as the New York State Gaming Commission confirmed it has no obligation to hand out all three licences.
A spokesman for the board told the New York Times: “There has never been a requirement that all three licenses be issued. It could be zero, one, two or three licenses that are issued in this process.”
Up until yesterday, MGM was competing with applications from Genting Group’s Resorts World, a partnership between the New York Mets’ owner Steve Cohen and Hard Rock International and a project led by Bally’s Corporation.
However, on the day that each bidder was required to submit final bids and indicate they were willing to pay licence fees and taxes, MGM Resorts announced that it had pulled its application, saying it no longer made economic sense to pursue expanding its existing MGM Empire City venue into a fully-fledged casino resort.
“Today, MGM Resorts made the difficult decision to withdraw its application for a commercial casino license in Yonkers, New York. Since submitting our application in June, the competitive and economic assumptions underpinning our application have shifted, altering our return expectations on the proposed $2.3 billion investment,” the group said in a statement.
MGM also cited the “small geographic area” in which the remaining candidates are clustered, as well as changes to the length of the licence its project expected to receive.
Two of the projects, Hard Rock International and Resorts World, are based in the borough of Queens. Meanwhile, Bally’s proposed site is at a golf course it owns in the Bronx.
Of the four projects, MGM Resorts had committed to the smallest capital investment.
Alongside the mandated $500m minimum licence fee, it had planned to spend $1.8bn on upgrading MGM Empire City.
In comparison, Bally’s and Resorts World have committed $4bn and $5.5bn for their respective projects. Hard Rock’s bid with Cohen is set to invest more than $8bn into developing a casino next to the Mets’ Citi Field stadium.
“Our proposal to renovate and expand Empire City Casino was predicated on the receipt of a 30-year commercial casino license, but based on newly issued guidance from the State of New York, we now expect to qualify for only a 15-year license. Taken together, these events result in a proposition that no longer aligns with our commitment to capital stewardship, nor to that of our real estate partner in Yonkers, VICI,” said the statement.
Each licence available will be for an initial term of between ten and 30 years, determined by the New York board on the “capital investment and financial return to the state provided by each applicant”.
What’s next?
The New York State Gaming Commission is now evaluating each of the remaining projects on a set of criteria, 70% of which is dictated by economic activity and business development.
The board will evaluate how each applicant proposes to advance ten stated objectives, which include maximising revenues for state and localities, providing the “highest and best value to create a secure and robust gaming market in the region and state, and recapturing gaming spend by residents currently travelling to an out-of-state facility.
The remaining 30% of the criteria is equally split between local impact siting, workforce enhancement and diversity framework.
Given the candidates that remain, the board will be forced to consider how the proximity of the proposed venues will impact the ability of each project to meet these objectives.
The Gaming Facility Location Board then has until 1 December to make its recommendations to the New York State Gaming Commission, which will have until 31 December to issue up to three Empire State commercial casino licences, ensuring that the state collects the casino license fee(s) ahead of schedule.
Successful applicants will be required to pay a minimum license fee of $500 million and will be subject to minimum tax rates of 25% for slot machines and 10% for table games.
