The New York State Legislature recently finalized the key financial terms for three casino licenses in the southern part of the state, marking the beginning of a new round of casino bidding.
According to a meeting on Monday that lasted about 10 minutes, the New York State Gaming Commission's Gaming Facility Location Board unanimously approved a license fee of $500 million and a minimum capital investment requirement of $500 million. This means that the minimum threshold for interested bidders will reach $1 billion.
The deadline for submitting bids is June 27, and the committee plans to issue the final licenses by the end of the year. However, before obtaining a license, applicants must complete a series of procedures, including zoning approval and environmental impact assessments that must be completed by September 30. The progress of zoning approval is particularly tense and has become a major obstacle for some bidding projects.
For example, last week, Bally’s company received rezoning approval from the city council and state legislature for its bid in the Bronx, while the project by Thor Equities and its Coney Island partners is still waiting for a voting resolution after June 19. Several bidding schemes in Manhattan are currently in the environmental assessment stage.
Community support is key
To ensure that the bidding schemes receive sufficient community support, each bidding project will establish a Community Advisory Committee (CAC), responsible for reviewing applications and assessing local public opinion. According to state regulations, the CAC will hold multiple meetings to collect feedback extensively and decide whether to proceed with the project by at least a two-thirds majority vote.
The composition of the CAC will vary depending on the bidding location. Projects within New York City are composed of the governor, the mayor of New York City, and relevant state senators, borough presidents, and city council members; projects outside New York City are composed of the governor, the county executive, and local legislators. Currently, the MGM Empire City proposal in Yonkers is the only bidding case outside New York City.
Tax rates and competition details
The Community Advisory Committee must complete a binding vote by the end of September. Approved bidders must pay a $1 million application fee and submit complete materials for review by the Facility Location Board. The tax rate on total slot machine gaming revenue must not be less than 25%, and the tax rate on other gaming revenues must not be less than 10%, with specific rates to be negotiated during the bidding process.
The review will focus on four main areas: economic development (accounting for 70% of the weight), site impact on the community, labor enhancement, and diversity framework (each accounting for 10%). The committee plans to complete the preliminary selection by December 1 and ultimately determine the number of licenses issued, up to three, but possibly fewer, or even none.
Challenges and opportunities coexist
With the license fee and capital requirements clarified, New York State faces the challenge of balancing substantial fiscal revenue with maintaining an attractive business environment. Although the minimum investment of $500 million is relatively reasonable, the equally high license fee, considering the time it takes for new casinos to start operations from scratch, undoubtedly increases the difficulty of applying.
The Yonkers Raceway Casino, already operational and with a first-mover advantage, is widely regarded as the strongest bidder. If approved, the state government expects an immediate revenue of about $1 billion, strongly advocated by Yonkers Mayor Mike Spano.
The open setting of tax rates also indicates that the government hopes to seek higher tax revenues on the basis of the minimum threshold. New York currently has the largest online sports betting market in the United States, with a tax rate of 51%, matching the highest level nationwide. The southern casinos will face fierce competition from Atlantic City, northern New York commercial and tribal casinos.
Furthermore, the potential legalization of online casinos in the future is also an important variable. Data from New Jersey shows that the rapid growth of online gambling puts pressure on the revenue of physical casinos, even showing a declining trend. Major casino operators such as Las Vegas Sands and Wynn have therefore abandoned bidding for a New York casino license, concerned about physical gambling being eroded by the online market.
The bidding for New York State's casinos has entered a critical stage, where fiscal revenue, community support, and market competition will collectively determine the ultimate winner of this high-stakes gamble.
