Big Apple on line casino prospects bitter for Nevada gaming firms

One by one, the Strip’s largest on line casino operators have departed New York City’s prolonged casino-resort approval course of after spending tens of millions to woo Big Apple residents and decision-makers. 

The most gorgeous exit got here Oct. 14, when MGM Resorts International — thought of a lock by gaming consultants for one of many three potential licenses — announced it was withdrawing its utility for a $2.3 billion on line casino resort in Yonkers, half-hour north of New York City, citing dramatic adjustments within the financial and aggressive circumstances governing the applying.

In a press release, the corporate stated its transfer was pressured by a discount of the gaming license size from 30 years to fifteen years, the dearth of distance between competing properties and tax construction uncertainties.

“[MGM’s] decision to withdraw is the result of a frustrating project timeline, including multiple lengthy delays,” Truist Securities gaming analyst Barry Jonas advised traders in a analysis notice revealed shortly after MGM’s announcement. “We had heard some concerns around the MGM project on the scale of incremental taxes and potential return on investment.”

MGM Resorts stated it should proceed to function Empire City Casino and the adjoining Yonkers Raceway. Under New York legislation, the on line casino has video lottery terminals, or VLTs, which function via a central server, not like conventional Las Vegas-style slot machines.  

Yonkers Mayor Mike Spano said in a statement that MGM’s departure “defies all logic, and it’s nothing short of a betrayal to the people of Yonkers and Westchester County.” He stated he needed New York Gov. Kathy Hochul to research the state of affairs.

On Oct. 16, Hochul stated she wouldn’t examine MGM’s sudden departure.

The voluntary exit by MGM Resorts adopted bulletins by Las Vegas Sands in April and Wynn Resorts in May. Both firms confronted persistent opposition in communities they hoped to develop multibillion-dollar resorts — Sands in Nassau County on Long Island, and Wynn adjoining to Hudson Yards West close to the Jacob Okay. Javits Convention Center.

Caesars Entertainment’s plan for a on line casino resort in Times Square in partnership with actual property developer SL Green and Jay-Z’s leisure firm, Roc Nation, was rejected by an advisory committee in September after Broadway theater operators, native companies and space residents forcefully objected to the challenge.

In a press release following the vote, Caesars stated it was “disappointed by the outcome” however revered the choice of the committee, which was made up of six residents appointed by the governor, mayor and native officers.

MGM, Wynn, Sands and Caesars invested tens of millions of {dollars} towards lining up areas, in addition to hiring consultants, architects, builders and authorized illustration to push their tasks. The downside, analysts famous, is that the state and metropolis by no means provided a clearly designed utility course of.

Sands blamed New York’s potential to legalize on-line gaming as one motive for its departure. However, the corporate’s plans for redeveloping the Nassau Coliseum advanced right into a resort have been opposed by Nassau County residents and neighboring Hofstra University.

“No one has championed any of these projects in New York. It’s not a business-friendly environment,” stated Las Vegas-based gaming trade guide Brendan Bussmann, who has been following the method lengthy earlier than state lawmakers authorised three casinos for New York City in 2013. The state additionally authorised as many as seven casinos in upstate New York, the place 4 at the moment are working.

“New York state’s gaming policy is there is no policy. You’ve had a process that has strung out way too long, that has taken most of the major operators out of the mix,” Bussmann added.

Bennett Liebman, a professor at Albany State Law School and a long-time adviser to the late New York Gov. Mario Cuomo, advised Bloomberg News the remaining three New York City areas are roughly 10 miles aside within the boroughs outdoors of Manhattan. 

“The chance that they attract tourists [or] foreign visitors seems somewhat unlikely,” he stated.

The state’s Gaming Facility Location Board is predicted to award as many as three licenses by Dec. 1, with closing approval from the New York Gaming Commission anticipated by Dec. 31.

Ties to the Strip

The on line casino operators left within the operating have Las Vegas connections. 

On the identical day MGM departed the market, Malaysia-based Genting Berhad, which operates Resorts World Las Vegas, upped the associated fee for the growth of a video lottery terminal on line casino on the Aqueduct Racetrack to $7.5 billion — near what MGM paid in 2009 to open CityCenter on the Strip. Two days later, Resorts World launched a multimillion-dollar advertising marketing campaign in help of the licensing effort.

New York-based Bally’s Corp., which is planning an leisure and on line casino advanced on the 35-acre Strip website the place the Athletics baseball stadium is underneath building, is planning a casino-resort at Ferry Point within the Bronx close to the previous Trump Golf Links website it now owns alongside the East River. 

If Bally’s wins one of many gaming licenses, the Trump Organization could be paid $115 million due to its former possession of the golf course.

Spano, in his statement about MGM, stated, “It’s no secret that the big winner from this reversal will be Bally’s proposal for a casino at the former Trump Links in Whitestone. It’s also no secret that Bally’s has a deal with Donald Trump that they will pay him an additional $115 million if they can open a casino there.”

Meanwhile, the third challenge nonetheless in play is being proposed by Florida-based Hard Rock Entertainment, which is remodeling the previous Mirage into Hard Rock Las Vegas. The firm, which is managed by the Seminole Indian Tribe, is in partnership with New York Mets proprietor Steve Cohen to transform Metropolitan Park in Flushing, Queens, right into a on line casino advanced adjoining to Citi Field.

NYC has lengthy attracted Vegas firms 

When state lawmakers authorised the on line casino growth course of in 2013, the three New York City casinos have been anticipated to draw the highest Las Vegas operators and produce roughly $5.5 billion in annual gaming income. At the time, the determine would have rivaled the Strip’s then annual gaming income of $6.5 billion.

MGM Resorts made the preliminary splash within the New York market in 2018 when it purchased Empire City and Yonkers Raceway for $850 million. A year later, Las Vegas Sands, led by Chairman and GOP megadonor Sheldon Adelson, employed former New York Gov. David Paterson — a Democrat — to steer the resort developer’s push for a New York City on line casino.

During a keynote address on the Global Gaming Expo in Las Vegas in 2014, Adelson, who died in 2021, urged New York City was an untapped market and he thought of asking New Jersey to permit the corporate to construct a on line casino within the Meadowlands sports activities advanced throughout the Hudson River from New York City. The location could be “a very attractive place” for a resort, Adelson stated. 

However, analysts stated the present standing is just not what New Yorkers have been anticipating.

Bussmann known as New York “Chicago 2.0,” a metropolis the place the key Strip gaming firms took a go on bidding for the event of a single downtown on line casino resort on account of a 40 % tax on gaming income and different burdensome necessities.

“Outside of New York, Los Angeles, San Francisco and Chicago, name me another city in the United States that would turn down a multibillion dollar project that offers to bring investment, jobs and overall economic impact to their community?” Bussmann stated. “Between taxes, community promises and the cost of doing business in New York City, it’s very hard to make the model work based on the investment to do a proper development.”

Jefferies Equity Research gaming analyst David Katz stated MGM’s location in Yonkers was superior to different areas, given its freeway entry and comfort to acceptable clients. 

“Nonetheless, MGM ultimately made a disciplined choice under the circumstances,” Katz stated. 

Analysts stated they wouldn’t be shocked if New York doesn’t award all three licenses, which was confirmed by Lee Park, a spokesman for the New York State Gaming Commission that controls the siting course of.

“There has never been a requirement that all three licenses be issued,” Park stated.

Jonas stated New York’s flirtation with on-line gaming, which drove Sands out of the market, is one other issue to contemplate. 

“Budgetary needs for the state remain,” he stated.