New York does not appear to be in any hurry to award three downstate casino licenses or share information with the public about the process. The idle time is allowing industry experts, analysts and investors to speculate about any number of possibilities, some of which came up at a recent gambling conference in Atlantic City.
Most of the US gambling industry is salivating (or shaking) at the thought of NY casinos in and around New York City. The potential for three downstate gambling parlors to catapult the Empire State into one of the most lucrative domestic markets is very real.
NYC casinos also carry risks.
High tax rates coupled with a $500 million licensing fee and a minimum $500 million investment ensure a difficult path to short-term profitability for all but a few casino operators. Online gambling’s appeal to younger customers might limit the long-term viability of an expensive land-based casino.
There’s also the challenge of competing against other regional gambling locations, such as AC, the Poconos and Connecticut’s tribal casinos.
This begs the question: is the juice from Big Apple casinos worth the squeeze?
Downstate New York casinos will be ‘very long process’
On Wall Street, investors are settling in for, what they predict, will be a drawn-out ordeal.
“This is going to take some time,” said Duane Bouligny, managing director of Wells Fargo Bank Security, during the East Coast Gaming Congress in Atlantic City.
“To go through the whole process of awarding a bid, to go through the process of building a New York City casino, or more than one, somewhere around (the city)…this is going to be a very long process.”
Bouligny and others on the ECGC panel suggested it may be three to four years before a full-scale NYC casino becomes a reality. Any new casinos built from the ground up might not open until 2030.
So many questions, so few answers
But no one knows for sure.
The criteria being used by the three-member New York Gaming Facility Location Board are relatively unknown. Whether officials in Albany are pushing for quick tax revenue, community investment or something else is a bit of a mystery.
“Nobody really knows what the state wants,” Bouligny said.
Two of the three downstate licenses are expected to go to existing racinos in the downstate area. Empire City, an MGM Resorts International property in Yonkers, and the Genting Group’s Resorts World at Aqueduct Racetrack in Queens will likely be on the state’s shortlist.
Caesars Entertainment, Mohegan Gaming, Hard Rock International, Bally’s Corp., Wynn Resorts, Saratoga Casino/Legends and Las Vegas Sands have all submitted applications and proposals of their own.
Jobs, community investment are persuasive political talking points
The moderator of the Wall Street panel at ECGC in Atlantic City raised the question of whether NY might prefer to have two new casinos constructed rather than convert existing facilities.
Mohit Kansal, managing director for Clairvest Group, said local resistance would make that scenario very unlikely. In Nassau County, Hofstra University opposes the Sands project, citing traffic and crime. A Times Square coalition is fighting back against Caesars’ bid for a Midtown casino.
“I think it’d be very tough,” he said. “There’s a lot of communities that are not supporting these (projects).”
Bouligny said multiple construction projects are not out of the question. A local politician pushing the narrative of job creation and community investment could quickly change the conversation.
“If they’re motivated by new investment in downstate, and somebody’s going to build a new $2 billion to $5 billion properties (that’s) going to create thousands and thousands of jobs, you could see a scenario where only one of the two (racinos) get the new license,” he said.
Yonkers, Aqueduct are not ‘forgone conclusions’
Jordan Bender, a senior equity research analyst at JMP Securities, said if tax revenue and solving budget issues are the goal, Yonkers and Aqueduct make the most sense.
“It would take about a year to properly put in the (capital expenditure) to expand the properties, but they will continue to run and generate money for the state,” he said.
Bouligny cautioned against making rash predictions about who will get the downstate licenses.
“I don’t think it’s a foregone conclusion that the two existing (racino) properties are gonna get those two licenses,” Bouligny said. “I think it’s likely, but I don’t think it’s a foregone conclusion.”