Prospective casino licensees in downstate New York will have to pay at least $500m in upfront license fees under the terms of a budget deal pending the governor’s signature.
Both chambers of the state legislature on Friday (April 8) approved Senate Bill 8006, one of several state budget bills that includes guidelines for the acceleration of the process to issue three new full casino gaming licenses.
The licenses can be issued to properties in various different parts of the state that do not already have proximity to existing commercial and tribal casinos, but the target is expected to be downstate in the area in and around New York City.
Once the budget measure is enacted, a five-member Gaming Facility Location Board appointed by the New York State Gaming Commission will issue a request for applications (RFA) and assess the responses on their respective merits using a designated scoring system.
The system is weighted 70 percent in favor of economic activity and business development benefits, and 10 percent each for local impact of the proposed property, 10 percent for workforce enhancement favors, and 10 percent for diversity plans.
The law also directs the board to consider the difference between applications to convert an existing video lottery facility, such as MGM Resorts International’s Empire City Casino in Yonkers or Genting Group’s Resorts World New York City in Queens, into a full casino, or a new licensee constructing a new facility.
The board will also set a required minimum capital investment and an upfront license fee, with the requirement that the license fee be no less than $500m.
The new licensees will also have to pay a higher annual license fee of $750 per gaming position, compared with the $500 per position paid by the four existing casino-resorts.
The commission will set the tax rate for the three new casinos through the bidding process to be outlined in the RFA, with a requirement that the tax rate be at least 25 percent of slot machine revenues, and 10 percent of all other gross gaming revenue.
Existing casinos pay a tax rate of at least 30 percent on slot machines following a tax reduction that was part of last year’s budget, as well as 10 percent on table games and retail sportsbook operations.
Amid concerns from legislators in the city, the budget bill also requires a separate six-person community advisory committee be formed for any proposal within the five boroughs of New York City. The board will include appointees from state and local legislators who represent the proposed area, as well as New York Governor Kathy Hochul and New York City Mayor Eric Adams, both Democrats.
Two-thirds of the advisory committee must approve of any successful application.
“The inclusion of the downstate casino licenses in this year’s budget is a win for New York State and the local communities where these licenses will go,” Senator Joseph Addabbo, a Democrat and chairman of the Senate’s Racing, Gaming and Wagering Committee, said in a statement.
“By allowing three casinos in the downstate region to operate with full licenses, it will create thousands of jobs when considering construction and credible post-construction union jobs. It also means additional revenue for the state, estimated at an initial $1.5bn from the three license fees, and will allow us to significantly fund important educational and gaming addiction programs.”
When issued, the RFA is expected to draw interest from many of the major players in the casino gaming industry including Las Vegas Sands, Wynn Resorts, Hard Rock International, Rush Street Gaming and Bally’s Corporation.
Hochul still needs to officially sign the budget into law for the plan to become effective, but the governor is virtually certain to do so in the coming days.
New York voters approved a constitutional amendment in 2013 that allowed the legislature to authorize up to seven casinos in the state.
The legislature opted to implement the plan in two phases, however, approving four Upstate New York casinos followed by a seven-year wait from the opening of the first upstate casino before offering the remaining three licenses. That moratorium was previously set to expire in February 2023, before lawmakers agreed to accelerate the process this year.
If any of the new casino licensees begins to offer wagering prior to the expiration date, the bill says they will be responsible for any penalty payments to the existing casinos. In addition, the bill does not allow the licensees to open a temporary casino, requiring that the permanent casino space be completed before the commission approves the facility to open.
Alongside the casino expansion, the budget bill passed by lawmakers late on Friday also will clarify provisions of last year's state budget law that authorized mobile sports wagering.
The new budget establishes that licensed mobile sports-betting operators must pay an annual fee of $2.5m to compensate New York casino-resorts for hosting sports-betting servers on the premises. Each of the casino-resorts will receive $5m annually. Previously, state law had indicated that operators should pay $5m annually directly to the casino that hosted their server.