New York Casino Licensing Battle Set To Begin

April 13, 2022
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The bidding process for the three new licenses to operate a full-fledged casino in or around New York City will likely be one of the most hotly contested in U.S history, with many of the nation’s most prominent operators having already expressed interest.

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The bidding process for the three new licenses to operate a full-fledged casino in or around New York City will likely be one of the most hotly contested in U.S history, with many of the nation’s most prominent operators having already expressed interest.

Democratic Governor Kathy Hochul signed budget legislation Monday (April 11) that will accelerate the process of issuing three new licenses likely destined for the downstate region of New York.

Although the state only enacted the legislation this week, discussions have been in motion for years.

Last year, the state held a request for information (RFI) process to gauge interest and advice from current and potential stakeholders as to what the New York State Gaming Commission should be looking for in awarding the licenses.

The responses, which were made public late last year, are not proposals as to what prospective licensees would look to construct if awarded the license, but they do give some indication as to the high level of interest in entering the market.

“The awarding of downstate licenses … will be a highly competitive process where top operators from the United States and the world would invest large amounts of due diligence and effort to secure a license,” wrote Wynn Resorts in its response, adding that some companies could submit multiple bids for separate locations.

“The market is considered strong, the planned competition in the state is considered reasonable, and the state is viewed as fair and reasonable as the host and regulator,” Wynn added in its submission.

Las Vegas Sands has long pushed to construct a casino-resort in New York City, including hiring former New York Governor David Paterson, a Democrat, as a senior vice president in hopes of lobbying to speed the process along.

The gaming company also reportedly had talks with New York Mets owner Steve Cohen about a plan to construct a casino near Citi Field, where the Major League Baseball team plays, in Queens.

“Since 2013, when New Yorkers voted in favor of authorizing three casino licenses in downstate New York, [Sands] has looked forward to the opportunity to develop a destination resort in the NYC metro area,” the company wrote in its response.

“If given the privilege and opportunity, Sands is committed to investing in excess of $2.5bn in the NYC Metro area. Sands is prepared to further deploy significant additional investment in the future to fully secure the long-term success of New York.”

Both MGM Resorts International and Genting Group, which operate video lottery casinos in and around New York City and are looking to upgrade to a full license to allow live table games and a land-based sportsbook, responded to the RFI, although MGM’s response was fully redacted upon release.

Both companies have frequently been touted as favorites to win two of the licenses, due to their ties with influential labor unions, and due to the speed with which they could potentially get to market, compared with a new licensee who would need to complete construction of their permanent gaming space before being given the go-ahead to launch, as the legislation prohibits a temporary facility from being cleared to launch.

In its response, Genting urged the commission to avoid reliance on projected revenues from bidders, arguing that doing so in the past proved to be a mistake during the initial awarding of licenses to upstate casinos, which many leaders have complained underperformed relative to those projections.

Genting operates the Resorts World Catskills through its Empire Resorts subsidiary and the property is the highest grossing casino in the state, while also being the closest to New York City.

“The process for considering awards must rest on a foundation of rigorous and conservative analysis, as New York State learned after awarding licenses to upstate casino operators, projections can be wrong,” Genting said.

Genting argued that a less rigorous vetting of projections could lead to avoidable issues, such as “applicants that adhere to putting forth supportable, transparent and conservative projections may lose out to competitors that, by contrast, put forth projections that are overly optimistic and are based on assumptions that may be less likely to materialize.”

Another company that already operates one of the upstate casinos and is looking to add to its portfolio is Rush Street Gaming, which operates Rivers Casino in Schenectady.

“Rush Street Gaming is ready and equipped to bring the same collaborative approach to the development of a downstate gaming facility that we used to transform a former brownfield site in the city of Schenectady into a thriving economic engine and flourishing riverfront destination,” the company wrote.

One possibility that has been speculated about for years is the idea of a centrally located casino in Manhattan, potentially even in the tourist-rich environment that is Times Square.

One company that has considered such a plan is Hard Rock International, which has reportedly proposed a casino right on Broadway in the heart of Times Square.

Hard Rock CEO Jim Allen said earlier this year that the company has three potential sites in mind for a potential New York bid, but in its RFI response, Hard Rock pitched the need for a property in an existing entertainment area.

“A world-class integrated resort casino (IRC) in the New York City region is a once-in-a-generation opportunity, and it is critical that it is done right,” Hard Rock wrote in its response.

“IRCs can be a destination unto themselves but a correctly-placed IRC in an existing entertainment and tourism district can be materially additive to a city in attracting incremental tourism, supporting existing businesses and attracting visitors,” it continued.

“The ideal site would allow the IRC a recognizable address that people are comfortable getting to, proximity to primary modes of transportation and have easy access to both the property and existing attractions.”

A Manhattan property is the most likely to draw pushback from local legislators, however, which is what spurred the creation of a six-member community input committee appointed by local and state legislators that will have to provide a two-thirds vote of support on any successful casino bid.

Bally’s Corporation is another company that has expressed interest in a New York property, although chairman Soo Kim told the New York Times that it would likely look elsewhere than Manhattan.

“We’re thinking more of the outer boroughs, a place where we think that we can have the convenience for people from New York City, but also to be able to pull from the suburbs,” Kim said.

One company notable by its absence from the RFI responses is Caesars Entertainment, which boasts the largest number of casino properties of any company in the United States.

Caesars has been mixed in its public statements on its plans to pursue a New York casino license.

On the company’s quarterly earnings call in February, CEO Tom Reeg was pessimistic about the chances of building a new casino in New York, although he left open the possibility of managing a property constructed by a separate developer.

“New York is a difficult regulatory state,” Reeg said.

“I think it's going to be extremely expensive to build there … and I think there's a likelihood that you're going to have to solve some other problem of the city in addition to creating the jobs that you do in building a casino, so it's not going to be enough to pick a site, build a casino, create the jobs and generate a return, there's going to have to be other investment there as well.

“So I would say, on our balance sheet, it's extraordinarily unlikely that we make a material investment into New York, land-based."

No timetable has been set for the release of the request for applications from the Gaming Facility Location Board, but the legislation requires a majority of members to be appointed to the board within six months.

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