The process of acquiring one of three new licenses to operate full-fledged casinos in or around New York City officially comes with the most expensive price tag in U.S. history, after a state site selection board approved a minimum $500m license fee.
It took the three-member New York Gaming Facility Location Board just 20 minutes on Tuesday (January 3) to unanimously approve the historic upfront fee, along with another regulation establishing a $500m minimum capital investment in any casino-resort project in the New York City metro area.
“This is higher than any other license,” said board member Stuart Rabinowitz. “Time has gone by; prices have gone up. This, we think, is a fair amount.”
Rabinowitz noted that the location board approved a uniform license fee and believe the three available should not be valid for more than ten years. He added that the $500m capital investment was a minimum and “applicants were free to submit a higher capital investment in a competitive process.”
The board also unanimously approved a 70-page request for applications (RFA) to solicit proposals for up to three commercial casino-resorts.
In 2013, New York voters approved a constitutional amendment to expand casino gambling, authorizing up to seven casinos, with initial legislation permitting four resorts in Upstate New York.
Last year, Governor Kathy Hochul, a Democrat, signed a series of budget bills including Senate Bill 8006 that included guidelines to accelerate the process of issuing three new licenses in and around New York City.
Those three casinos will pay a 25 percent tax rate on gross gaming revenue from slot machines and 10 percent tax rate on gross gaming revenue from all other sources, including table games and retail sports betting.
Tuesday’s approvals were expected.
The New York State Gaming Commission (NYSGC) on October 4 announced the first three of five members of the location board, establishing a 90-day window for the state to develop a request for applications.
NYSGC chairman Brian O'Dwyer opened Tuesday’s meeting by reminding board members that their “resulting decision will not be without controversy,” and that “every action they take will be scrutinized.”
Shortly after the board’s decision, Thor Equities, Saratoga Casino Holdings, The Chickasaw Nation and Legends Global Planning announced their intent to submit an application to the board seeking licensure for a proposed $3bn casino at Coney Island in Brooklyn.
“This is Brooklyn’s moment, and we can think of no better place for a world-class entertainment destination than right here in Coney Island,” said Melissa Gliatta, chief operating officer of Thor Equities, in a statement. “We look forward to submitting a comprehensive proposal that drives the local economy forward and is supportive of the entire community.”
Each applicant is required to pay an initial application fee of $1m to defray the costs associated with the processing of the application.
The conventional wisdom of industry observers is that MGM Resorts International’s Empire City Casino in Yonkers and Genting Group’s Resorts World Casino in Queens will get two of the three licenses to expand their established video lottery facilities into full casino-resorts, leaving Las Vegas Sands, Wynn Resorts, Rush Street Gaming, Bally’s Corporation among the companies expected to apply for the last available license.
However, O'Dwyer dismissed expectations that MGM and Genting would automatically be granted licenses.
“There is no preordained conclusion to this process,” O'Dwyer told location board members. “No one enters in this process with an advantage. This decision will ultimately be your own without any outside influence.”
The board set a February 3 deadline for applicants to submit the first round of questions included in the RFA but did not set a deadline to issue their responses. Applicants' second set of questions are due 30 days from the board’s response to the first set.
Issuing the RFA is just one step in the licensing process.
Any applicant also must get at least two-thirds approval from the Community Advisory Committee in their area, along with local zooming approval.
If a project receives both approvals, the board will then determine which applicants will generate the most economic activity and business development, including capital investment in the project and maximizing state and local revenues.
The board will consider a project's potential impact on local communities, its workforce development plans including goals for hiring minorities, women and disabled veterans on construction jobs, and an overall diversity workforce framework.
Board members expect minority- and women-owned business contracts to “meet or exceed” the state’s 30 percent utilization goal. Applicants will also need to outline their problem gambling measures, buying or leasing domestically manufactured slot machines and reaching contracts with organized labor.
Hiring a diversified workforce will be part of the evaluation process, with the board seeking information on a project’s workforce demographics, diversity in ownership and leadership, and current and planned diversity efforts.
The decision by the board to select an applicant for potential licensure by the gaming commission will be weighted by the following factors: economic activity and business development at 70 percent; local impact at 10 percent; workforce enhancement, 10 percent; and diversity framework, 10 percent.
After the board makes its determinations, the six-member gaming commission will make the final decision on which casino proposals will receive licenses.