A downstate casino license in New York is going to be quite costly.
The fee: at least $1 billion.
As part of the one-house budget from the New York State Senate, the New York State Gaming Commission would award up to three downstate casino licenses — with each going for a fee of at least $1 billion — following a competitive process.
“I think we’re on our way,” Sen. Joe Addabbo said. “I know there’s always apprehension on the assembly side, but I know the Governor’s office was in on it back in January, and we’ve included it in our one-house.”
Expediting downstate NY casinos not ‘a real heavy lift’
Addabbo emphasized all the positives this amendment would create for the state.
“We’re staring at roughly $2.5-$3 billion in revenue and educational funds and good jobs. You’re talking about thousands of construction jobs as well as post-construction jobs, and as an elected official that’s what your dream is — to find employment for your people, especially post-pandemic.
“I think it’s a great opportunity for the state, and let’s face it — we’re only expediting (the downstate licenses) by one year. I don’t think it’s a real heavy lift. It’s certainly something that’s doable and I look forward to the next three weeks of negotiating it.”
As per the exact language of the bill amendment S8009B:
THE BOARD SHALL DETERMINE A LICENSING FEE TO BE PAID BY A LICENSEE WITHIN THIRTY DAYS AFTER THE AWARD OF THE LICENSE WHICH SHALL BE DEPOSITED INTO THE COMMERCIAL GAMING REVENUE FUND; PROVIDED HOWEVER THAT SUCH LICENSING FEE SHALL BE NO LESS THAN ONE BILLION DOLLARS PER LICENSE.
Bill amendment would generate more revenue than projected
Initial projections were that licenses could be $500 million each for a total of $1.5 billion going to the state.
Well apparently, double that.
“We’ll see,” Addabbo responded when asked if he thought any bidders would go to $1 billion. “We know the value of having a gaming license in New York — especially downstate. But that’s what the process is for. Whether you look at the Spectrum report that the state sanctioned and it said $500 million or whether you look at the market and you can realistically see somebody paying $1 billion for this.
“We know there is an entity out there that’s willing to pay $1 billion now for maybe a brick and mortar (property) that won’t occur for maybe another three years or more. But yet they’re willing to pay up front.”
The tax rate on revenue from slots would be no less than 45%, and the tax rate for GGR from all other sources would be no less than 10%. It is noteworthy that this was rejected by the assembly (historically the senate has been more pro-gaming than the assembly).
Former bureaucrat Bennett Liebman tweeted: “NY legislative 1 house budget bills mean tough sledding for #downstatecasinos. Assembly simply rejects casinos. Senate ok’s framework of 3 downstate casinos but adds $1 bill licensing fee, local approval requirement & minimum high tax rates of 45% on slots & 10% on table games.”
Timeline for NY downstate casino licenses
As per the budget, the NYSGC would have to issue a request for applications no later than July 1, 2022, with a submission deadline of no later than 60 days after the date of that request. The license(s) must be awarded and fees must be paid no later than Dec. 1, 2022. The initial license duration would be for 10 years.
It’s possible that — despite the language — the final fee could be between $500 million and $1 billion, depending on interest. But it’s clear that policymakers believe there’s going to be plenty of it, as evidenced by the massive licensing fee.
The NYSGC also doesn’t have to award all three licenses as of yet, but Addabbo is confident it will.
“The bottom line is you’re going to leave a significant amount of revenue and educational funds on the table and jobs so I think the process and again being New York and the value of a gaming license in NY so value so again I think all three go in my opinion,” he said.
The state’s four upstate commercial casinos had a seven-year head start, but that window nears its closing.
As per the language:
THE EXPIRATION OF THE SEVEN YEAR RESTRICTED PERIOD FROM THE DATE THAT AN INITIAL GAMING FACILITY LICENSE WAS AWARDED IS FEBRUARY TWENTY-EIGHTH, TWO THOUSAND TWENTY-THREE FOR THE THREE INITIAL CASINO LICENSES AND NOVEMBER TWENTY-SECOND, TWO THOUSAND TWENTY-THREE FOR THE FINAL CASINO LICENSE AWARDED.
New York VLTs would become full-fledged casinos
Local policymakers support video lottery terminals (VLTS) Resorts World NYC and MGM Empire City to become full-fledged casinos. They also have the advantage of speed to market. This potentially gives them a leg up on the competition. It’s worth noting that Resorts World is in Addabbo’s district, while Empire City is in Sen. Majority Leader Andrea Stewart-Cousins’ district.
“There’s a process, so it’s not gifted to any entity,” Addabbo said. “But I think the process would show that these two entities — and you know I have Resorts World in my district — that they’ve proven themselves to be not only credible neighbors but credible gaming sites. And I think that matters.
“Also, for those in either house that have apprehension about actually building and proliferating these areas with new sites, I think most are resolved to say, ‘Hey, they’re already gaming sites, just give them the graduated license or let compete but obviously end up with a graduated license,’ there’s something to be said for that as well. But again that’s what we’ll see how the process dictates and how that works out but speed to market is a factor no question.”
To little surprise, the VLT owners are excited for lawmakers to expedite downstate casino licenses.
“That has been our vision (an NYC casino) for the last 10 years,” Resorts World CMO Darlene Monzo told PlayNY.
“It will take some time. Obviously, we need to understand what the tax is going to be, what the licensing fee is going to be,” MGM Resorts International CEO and president Bill Hornbuckle said on his company’s latest earnings call. “It will determine a great deal, presuming we’re fortunate enough to win a license and ultimately go forward.”
What about the third NY casino license?
The third casino license — which could take 3-5 years to build — would follow a competitive bidding process.
Hard Rock chairperson Jim Allen recently said the corporation has said it has three potential locations in NYC on which it could build a casino. Allen, though, declined to divulge specifics. Las Vegas Sands has also been aggressive in displaying interest. However, Tom Reeg, CEO for Caesars, said in a recent earnings call that his corporation was unlikely to enter the fray.
Other interested parties who responded to the NYSGC’s request for information include:
- UE Resorts International (Universal)
- Wynn Resorts Development
- Rush Street Gaming (Rivers)
- Bally’s Corporation.
“Listen, I think they’re all credible entities and I think they would all do well in New York,” Addabbo said. “I think they all bring a certain brand and credibility to the table, and we’re going to make sure that T’s are crossed and I’s are dotted. We’re going to make sure there’s a credible process that protects the integrity of the gaming industry. I know there will be certain looks at not only how fast they can go to market but also diversity and MWBE and veteran hirings and other details. But like I said I’m so enthusiastic about this process and I can’t wait to see who winds up with these licenses. But again it’s a good discussion to have.”
Any developer looking to build new construction in the five boroughs is expecting to face significant opposition. And that has been the case historically as it pertains to casino projects. Still, obtaining a downstate license would allow any corporation to expand offerings to include a retail sportsbook and/or poker room.
The one-house senate budget also included the bill amendment to add online sports betting operators and include more minority-controlled businesses. That bill amendment was also in the one-house assembly budget. That’s significant, and certainly gives the bill amendment traction prior to Gov. Kathy Hochul’s April 1 state budget due date.