A Billion-Dollar Bet: The Race for Downstate New York Casino Licenses
For anyone eyeing a casino license in downstate New York, the bar has been set at a staggering $1 billion.
In a swift meeting that lasted just under ten minutes, the New York State Gaming Commission’s Gaming Facility Location Board solidified key details about the three coveted casino licenses available in the region. The board unanimously agreed on a hefty $500 million license fee, paired with an expected minimum capital investment of another $500 million. With bids due by June 27, the commission aims to announce the license winners by year-end.
However, the road ahead is fraught with hurdles. Applicants must complete various processes, including zoning and environmental assessments, by September 30. Zoning challenges have already caused significant time pressure, as deadlines loom.
Recently, Bally’s Corp secured crucial rezoning approval for its Bronx proposal from both the New York City Council and the state legislature. In contrast, the Coney Island venture led by Thor Equities and its partners is still awaiting de-mapping approval, with voting anticipated no earlier than June 19. Meanwhile, all three proposals in Manhattan are currently navigating their environmental evaluations.
New York bidders are investing considerable effort into meeting the elaborate requirements of this process, such as securing community backing and obtaining necessary endorsements. Once bids are officially submitted, the process will essentially restart.
Each proposal will have a dedicated Community Advisory Committee (CAC) to assess local support and gauge community feedback. According to the NYSGC, these CACs will be integral in determining whether a project can move forward. Each committee will convene multiple times for input and must achieve a two-thirds majority vote for approval.
The composition of each CAC varies based on whether the project is located within New York City or beyond. For city-based initiatives, members include Governor Kathy Hochul, NYC Mayor Eric Adams, and relevant local officials like the borough president and city council members. Currently, only MGM Empire City’s proposal in Yonkers is situated outside the city, leading to a slightly different CAC structure.
The CACs must finalize their votes by September 30. Successful bidders will then pay a $1 million application fee and submit all relevant documents to the facility location board for further review. Notably, prospective applicants should be prepared to negotiate tax rates as part of their submissions.
Applicants can propose tax rates on gross gaming revenue, with minimums set at 25% for slot revenue and 10% for all other sources. The board will evaluate proposals based on four main categories: economic development, local site impact, workforce enhancement, and diversity initiatives. Economic development will carry the most weight, at 70%, while the other factors will account for 10% each. The final decisions must be made by December 1.
The commission, though, has the flexibility to award fewer than three licenses or none at all.
As New York hones in on a careful balance of harnessing the economic potential of casinos while ensuring a conducive business environment, the financial landscape looks promising yet challenging. The minimum investment appears manageable, but the steep license fee raises concerns, especially considering that new developments (excluding existing racetracks) will require time to become operational.
This environment has led many to view the racinos as frontrunners for the licenses. The state could stand to gain around $1 billion by approving these bids, a sentiment echoed by Yonkers Mayor Mike Spano.
The adjustable tax rate reflects a strategy to go beyond the minimums for both slots and table games. While New York boasts the highest online sports betting market in the U.S., it also has the top tax rate of 51%, suggesting that new downstate casinos will face stiff competition from nearby Atlantic City as well as upstate commercial and tribal establishments.
Finally, the potential for future online casino legalization looms large. Although it’s not currently permitted in New York, signs indicate a possible shift toward iGaming could be on the horizon. As shown in New Jersey, where online gaming has boomed while traditional casino revenues have faltered, the prospect of regulatory shifts has already deterred major players like Las Vegas Sands and Wynn Resorts from pursuing license bids due to fears of revenue shifts.
In this high-stakes environment, every player must navigate a complex web of regulations, community sentiments, and fierce competition to carve out a piece of New York’s lucrative gaming market.