Genting Malaysia and MGM Resorts are seen as strong favorites to win full casino licenses in New York after Governor Kathy Hochul reached a budget deal with senate leaders over the weekend to fast-track casino legislation.
Under the deal, New York can issue licenses for up to three downstate casinos, depending on the attractiveness of bids, with the New York State Gaming Facility Location Board now expected to run a competitive process similar to the upstate casino selection process conducted several years ago. The legislation sets a minimum license fee of US$500 million but gives the New York State Gaming Commission the option to accept higher bids. Slot and table tax minimums are set at 25% and 10% respectively but could also be increased as part of the bidding process.
While New York is seen as “the largest land-based gaming opportunity in years”, CBRE Equity Research analyst John DeCree said in a Monday note that the existing ETG-only casinos – Genting Malaysia’s Resorts World New York City (RWNYC) and MGM’s Empire City – held a natural advantage due to likely concerns over community support and economic development.
“Demonstrating evidence of local support and zoning approval is required for all applicants,” DeCree said, adding, “This could be the most challenging part of the process, which is one of the reasons we believe Empire City and RWNYC are front-runners for two of the three licenses.”
DeCree also noted that economic activity and business development, including maximizing revenues received by the state and localities, are the primary criteria for awarding licenses.
“This is another key reason we view Empire City and RWNYC as likely winners,” he wrote. “In addition, capital investment and job creation are key factors. The remaining criteria include mitigating the potential impact on host communities, workforce enhancement, sustainability and diversity.”
DeCree estimated the total addressable market in New York at US$4.8 billion in GGR, estimating that MGM’s Empire City could generate US$1.28 billion in gaming revenue and US$1.45 billion in total revenue annually.
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