There was a major shift in the race for the three downstate New York casino licenses yesterday. MGM Resorts announced it was dropping its bid for one of the licenses.
The company operates Empire City Casino in Yonkers. Despite its name, the property is actually a racino featuring only electronic games and a functioning race track. Originally, MGM planned to turn this into a fully operational casino and completely overhaul the venue.
The company planned a major expansion that would’ve added 183 live dealer games, 14 new restaurants and bars, and a 5,000-seat entertainment venue. However, the company scrapped the plan after company officials learned regulators changed the term of the license. Instead of 30 years, regulators halved the licensed and gave it a 15-year life span.
Downstate Casino Cluster Creates Built-In Competition
Additionally, MGM officials said the clustering of three casino resorts in the same area offered competitive challenges they didn’t want to face.
This would be especially true if the Bally’s project in the Bronx received a license. A Bronx casino would be closer for basically anyone living in the five boroughs than MGM’s property in southern Westchester. The other two finalists for a license are the next borough over in Queens.
When the process began, companies had projects in four of the five boroughs, and Long Island. But Las Vegas Sands dropped its bid for a casino adjacent to the Nassau Coliseum, local government committees nixed the projects in Manhattan and killed casino hopes in Brooklyn at Coney Island. As a result, the remaining three bids were in the two boroughs closest to Westchester County.
“The newly defined competitive landscape – with four proposals clustered in a small geographic area – challenges the returns we initially anticipated from this project,” company officials said in a statement. “Also, our proposal to renovate and expand Empire City Casino was predicated on the receipt of a 30-year commercial casino license, but based on newly issued guidance from the State of New York, we now expect to qualify for only a 15-year license. Taken together, these events result in a proposition that no longer aligns with our commitment to capital stewardship, nor to that of our real estate partner in Yonkers, VICI.”
New York Tax Rate
Lastly, an MGM casino in New York would be taxed at some of the highest rates in the country. New York taxes net gaming revenue at a 51% rate, which only added to MGM’s unstable projections.
“Since submitting our application in June, the competitive and economic assumptions underpinning our application have shifted, altering our return expectations on the proposed $2.3 billion investment,” said company officials.
The only part of MGM’s initial projections still in place would be future considerations for online casino licenses. It’s still very likely regulators would give licensing priority for future online gambling legalization to existing stakeholders in the industry.
Just Three Projects Remain
With MGM’s decision, that leaves just three bidders for three licenses. In essence, it’s now known which projects will be granted a license. The Bally’s project in the Bronx, Resorts World New York City, and Mets owner Steve Cohen’s bid for a Hard Rock Casino next to Citi Field are the only remaining bids.
The Yonkers community advisory committee recently approved the MGM project. Exiting the race didn’t sit well with local government officials. Especially since MGM officials previously said that the property couldn’t survive in its current racino form.
If MGM were to shutter the property, hundreds of local workers could end up losing their job.
“This decision by MGM defies all logic, and it’s nothing short of a betrayal to the people of Yonkers and Westchester County,” Yonkers Mayor Mike Spano told CBS News. “I am calling on Governor [Kathy] Hochul to launch an independent investigation into this process, because the reasons MGM gives for its 180-degree reversal just don’t add up.”
Spano added that Bally’s was the biggest winner. The company’s casino plans will put a property adjacent to the Ferry Point golf course, which the company purchased from President Donald Trump in 2023.
Spano said the company would pay Trump an additional $115 million if it opened a casino on the site. Consequently, Spano is concerned the process may have been “tainted or manipulated.”
A Queens community advisory committee approved the casino plan for the Resorts World New York City in September. A separate Queens committee approved the Citi Field plan that same month alongside a Bronx committee’s Bally’s approval.
