MGM Resorts International pulled out of the competition to operate a casino in the New York area, leaving three companies vying for three possible licenses to build gambling palaces serving the largest US city.
The Las Vegas-based resort and gambling company blamed shifting economic and competitive conditions, including a shorter-than-expected duration for its license, according to a statement Tuesday.
"The newly defined competitive landscape - with four proposals clustered in a small geographic area - challenges the returns we initially anticipated from this project,” MGM said.
With the last-minute withdrawal, the number of companies still in the running to operate casinos in New York has been winnowed to three from eight in the past few months. The remaining contenders were required to submit final bids on Tuesday indicating what they’re willing to pay in license fees and taxes as the state nears an awarding of the licenses.
MGM said its bid was based on a 30-year license but newly issued guidance from the state suggested only a 15-year permit would be granted. The company had proposed a $2.3 billion investment at its existing facility at Yonkers Raceway. It will continue to operate a slot machine parlor there.
New York officials have proposed tying the duration of a license to the amount of investment, with bigger outlays obtaining a permit that lasts longer.
Genting Group’s Resorts World has a $5.5 billion resort planned next to the Aqueduct race track in Queens. The company already offers slot machines at that site, and on Tuesday proposed paying $600 million for its license, along with tax levies of 56% on slots and 30% on table games.
Mets owner Steve Cohen is partnered with Hard Rock International for an $8.1 billion entertainment complex next to Citi Field in Queens.
Bally’s Corp. has proposed a $4 billion resort at a golf course it owns in the Bronx. President Donald Trump’s company, the former owner of the golf course, is to receive a $115 million payment if Bally’s wins the license.
The awards could put three, Las Vegas-style resorts in the most-populous US metropolitan area. The licenses will allow for table games like blackjack and roulette, as well as sports betting in the casinos.
The bidding is the outgrowth of a 2013 voter referendum that permitted up to seven non-tribal casinos in New York. Four upstate casinos opened years ago. Three remaining licenses were held for the New York City area.
Eight groups submitted proposals in June, and four were eliminated through a process that gave local and state officials a chance to vet them based on feedback from the neighboring communities. None of the Manhattan casino proposals won approval in that stage.
The process is now in the hands of five-member Gaming Facility Location Board, which is expected to make a final decision by Dec. 1. The proposals are to be evaluated based on four criteria, with economic and business development accounting for the largest share at 70%.
Applicants were required to pay a minimum license fee of $500 million and minimum tax rates of 25% for slot machines and 10% for table games.
New York already has among the highest gambling industry tax rates in the US, tying New Hampshire and Rhode Island with a 51% levy on online sports wagering, according to the Tax Foundation. The state generated nearly $2.3 billion in casino tax revenue last year, second only to Pennsylvania, according to the American Gaming Association. - Bloomberg
