There are now only eight contenders left in the race as Wynn Resorts officially quits the competition for one of the three downstate New York casino licenses.
Wynn becomes the third applicant to pull out prior to the 27 June deadline, following Las Vegas Sands and Hudson’s Bay Co. Hudson’s Bay withdrew on 10 April, with LVS following two weeks later.
In a statement, Wynn stated, “After thorough consideration, we have opted not to proceed with a gaming license application in New York City. Recent developments have shown us that there are more beneficial uses of our capital, like investing in our existing and upcoming projects and stock buybacks, rather than entering an area where any casino operator would face prolonged opposition despite our commitment to employ 5,000 New Yorkers.”
Wynn, along with partners Related Companies and Oxford Properties, had put forward a $12 billion mixed-use project in Manhattan’s Hudson Yards district. The proposal included a casino, hotel, school, and housing units, with the latter being a contentious issue due to a disparity in the number of units pledged by Related in the past.
The opposition led to a doubling of the housing commitment in April, but with Wynn’s exit, it remains uncertain whether Related will proceed without the casino element.
Expressing gratitude to supporters, Wynn emphasized its belief in the potential of Related’s Hudson Yards West development.
The Writing was on the Wall
Although significant, the announcement did not come as a complete surprise. Wynn reported a 9% year-over-year revenue drop in the first quarter, with adjusted EBITDAR declining across all six global properties. The company has been heavily invested in a resort project in the United Arab Emirates, scheduled to open in 2027.
Financial concerns were compounded by apprehensions about digital expansion, a key factor in LVS’s decision to exit the competition. While New York hasn’t moved towards legalizing iGaming this year, its online sports betting market is thriving, with neighboring states like Pennsylvania, Connecticut, and New Jersey reaping substantial revenues from it.
LVS’s departure set the stage for Wynn, as both companies operate luxury, capital-intensive resorts and share similar strategic approaches. Their exits could signal challenges for the remaining bidders, many of whom lack comparable financial resources.
“We are still in the running in New York, but we will not overly push to secure a license there,” stated Wynn CEO Craig Billings earlier this month.
Failure to Launch
Despite over a month remaining before New York’s application deadline, the process has faced setbacks from the start. Beyond recent withdrawals, most remaining bids encounter logistical hurdles, with local opposition posing a persistent challenge.
With the departure of Hudson Yards, two other Manhattan proposals – Caesars’ Times Square project and Silverstein Properties’ Avenir development – are undergoing environmental reviews this week. However, as reported by W42ST, public awareness of these meetings has been lacking, raising concerns about transparency in the process.
This scenario underscores the disorganization and unpreparedness of the state, a longstanding concern among bidders. Delays in the process have led to frustration among participants, with proposals now facing environmental challenges close to the deadline without fault on the bidders’ part.
All bids were unveiled in 2023, and the prolonged delays have prompted several withdrawals. Licenses are projected to be awarded by year’s end.
Remaining Bids Imperfect
Bally’s remains in contention with its Ferry Point bid in the Bronx, but doubts linger about the company’s financial capacity for such a venture. At a recent political forum in the Bronx, none of the candidates openly supported the project.
Other relatively under-the-radar projects include The Coney, a bid in Coney Island by Thor Equities and the Chickasaw Nation, which recently received initial planning approval. Freedom Plaza by Soloviev Group and Mohegan is another contender, though Mohegan is grappling with significant debt issues following the closure of its Korean casino.
Metropolitan Park, an $8 billion project by Steve Cohen, may now lead the pack as it secures necessary rezoning approvals. Cohen and partner Hard Rock have overcome opposition, garnering support from key officials for the required rezoning legislation.
RW and MGM in Hot Water
One intriguing aspect of the lengthy selection process is the belief that two licenses are already earmarked for MGM Resorts and Genting Berhad to expand their existing ventures in Yonkers and Queens, respectively.
However, both Genting and MGM, along with Wynn, faced significant anti-money laundering fines in Nevada. Illegal bookmakers frequented their casinos, leading to investigations involving common offenders. While these fines don’t directly impact their New York bids, they are likely to be scrutinized during the review process.
At a hearing last September, New York State Gaming Commission chair Brian O’Dwyer emphasized the agency’s commitment to evaluating licensee qualifications, including the allegations against Wynn and Resorts World. The MGM fine had not yet been disclosed.
Resorts World made headlines by pledging over $1 billion in annual tax payments last April. This move stirred controversy among other bidders, who view it as unrealistic and potentially fueling tax demands from lawmakers.
New York already imposes the highest online sports betting tax rate at 51%. Tax rates for existing casinos vary regionally but are at least 30% of slot GGR. In comparison, Nevada and New Jersey tax rates are below 10%.
New York Just Another Japan?
The New York casino bid process has drawn parallels to Japan’s similar endeavor. Initial enthusiasm for Japan’s competitive market potential waned due to a protracted process and pandemic-related delays, leading to only one project, MGM Osaka, moving forward. This project broke ground recently and is set to open in 2030.
Japan is anticipated to reopen bidding for up to two more licenses, but uncertainty looms over potential bidders reengaging after previous withdrawals. Wynn abandoned the Japanese market in 2020, with CEO Billings indicating a possible return only under favorable conditions. New York risks missing out on opportunities akin to Japan’s situation.
“This is Japan 2.0,” remarked Las Vegas-based consultant Brendan Bussmann following Wynn’s announcement. He anticipates further setbacks before the deadline, setting low expectations for the number of proposals to be submitted.
“I’m setting the line at 8 and betting on fewer proposals being submitted,” he stated.
