The bidding process for three New York casinos licenses has officially begun

The bidding process for three New York casinos licenses has officially begun

bidding_officially_opens_for_three_ny_casino_licensesThe New York State Gaming Facility Location Board has officially kicked off the bidding process for three commercial casinos. The winners will be required to pay at least half a billion dollars in licensing fees and that number is a minimum. Without capping the fee, the board set up a potential bidding war for one or more of the licenses.

The board also laid out a tax scheme of 25% on slot machines and 10% on table game action. While some of the scoring and requirements to determine a winner seem clear-cut, according to the board, “Other important components of the Application may depend upon the understanding of the potential competitive landscape with other Applicants, which may only be gauged after these processes have been completed.”

A full 70% of a competitor’s score is supposed to come from a positive economic impact. With that, it’s hard to imagine MGM Resorts’ Empire City Casino at Yonkers Raceway or Genting’s Resorts World New York at Aqueduct being able to add enough new positions simply by turning electronic table games into dealer/croupier-hosted games. Replacing all of the VLTs (video lottery terminals) at either or both locations with RNG slot machines would also presumably have a counter-balancing negative economic impact as the state would have to forego current VLT revenues in order to collect new taxes. The last argument against allowing true competition for the three new licenses is the potential bidding war that could ensue if they are offered in a competitive bidding process.

Yonkers and Jamaica Queens Each Have One Advantage

The one thing the existing VLT casinos have going for them is built-in community acceptance. A separate Community Advisory Committee (CAC) will be appointed to review the applications.

According to the board, “In addition, the successful completion of municipal zoning and land-use processes will ensure that only projects embraced by the community would be presented to the Board for consideration.”

“Revenue from new gaming facilities is expected to generate substantial fiscal benefit to New York’s public schools, local governments and problem gambling treatment services. The jobs created by these casinos must deliver livable wages to help families live, stay, and prosper in New York.”

While it has been seen as almost a given that Yonkers and Queens VLT casinos would be favored to receive two of the licenses, that’s not necessarily what will happen, especially if the board follows its own mandate. The potential for market cannibalism aside, as it is a mitigatable or at least quantifiable factor, the greatest economic impact could certainly come from allowing the VLTs to continue operating and to award 3 new entities gaming rights in and around the Big Apple.

Hard Rock Might Reenter the Fray

In February 2021 at an awards ceremony for Hard Rock in Atlantic City posting record revenues post-Covid, Jim Allen, chairman of Hard Rock International announced that his company had already identified 3 specific parcels it would consider developing. He noted that the new $500m Hard Rock Hotel in Manhattan was not one of the locations under consideration.

“You have to have a footprint of real estate large enough to take advantage of the size of the market,” he said. “We’re extremely proud of our hotel on 48th Street, but its footprint is just not large enough for gaming. As far as other locations, really we’re waiting on the governor and the committee that’s going to be sending out the request for proposals to see what language is in the bill as to geographic locations that would be acceptable to the state.”

Since no geographical locations were forthcoming with the request for applications, the gambling public may well start to hear from Hard Rock again as the competition gets underway.

Times Square, Hudson Yards, Coney Island all on the Table

Caesars Palace Times Square is another hotly contested possibility with passionate advocacy and naysayers. Small shops, actors, hoteliers, and many others promote the idea while many stage owners and some producers are vehemently against a casino on Broadway.

Tom Reeg, CEO of Caesars said: “Caesars is thrilled to partner with SL Green in connection with a five-star project that will meet and exceed New Yorkers’ expectations for world-class entertainment, immediately enhancing New York City’s tourism engine and elevating this one-of-a-kind global destination to new heights. As one of the largest mobile sports books in New York, Caesars is passionate about New York itself. Caesars is also deeply invested in New York-based restaurant groups, chefs, and entertainers from across the Empire State.”

Western Yards at Hudson Yards in New York is another location, this one floated by Related Companies and Wynn Resorts. Craig Billings, CEO of Wynn Resorts said: “Wynn Resorts has a long history of utilizing a compact, upscale casino floor to support the creation of spectacular resort experiences that appeal to an array of guests—travelers and locals alike. We look forward to engaging with the community, learning and understanding what we can do to help New York City to continue to thrive.”

And then there is the $3b proposal for a Coney Island casino, as well as other locations covered here and here.

The 2013 referendum and legislation that made a New York City casino possible also mandated a 10-year moratorium on issuing the license. One reason was to let the four Upstate casinos authorized in the bill get their foundations set and clientele established.

As engaging as it was to follow that process from applications to licenses, the downstate tenders look to be much more so.

In seven more years, legislators are authorized by the 2013 referendum to offer 3 more licenses downstate – any additional after that would require a change to the state constitution.

Source: New York’s casino licence to cost upwards of $500m, G3 Newswire, January 6, 2023

Author: Henry Brown