New York State is welcoming a new governor, and New York City is preparing for a new Mayor, which presents a perfect opportunity to reconsider the expansion of casino games in the largest metropolitan area in the US.
Currently, the state of New York has had a disappointing track record in the gaming industry, highlighted by the recent controversy surrounding the legalisation of mobile sports betting. However, there are plans to issue three new casino licenses for the downstate area, including New York City and its surrounding suburbs.
According to a law passed in 2013, the process for granting these licenses will begin in December 2023, although there is a possibility that lawmakers may expedite this timeline. The market consensus suggests that two of the licenses will be awarded to the existing racetrack electronic gaming facilities, Resorts World New York City (operated by Genting) and Empire City (operated by MGM). In order to add live table games, these facilities will likely have to pay a state license fee of $500 million each.
Property developer Jeff Gural, who converted his upstate Tioga Downs racino into a full-service casino in 2016, believes that these racetrack facilities are the logical choices for the licenses. He reasons that they can quickly open as casinos without facing opposition from the community, as they already have gambling operations in place. Gural also suggests that if they were to be denied the licenses and they were granted to other entities, it would significantly impact their ability to function as racinos.
Despite being racinos with lacklustre venues, Resorts World New York City and Empire City have shown promising revenue figures. In 2019, Resorts World NYC generated over $825 million in gross gaming revenue (GGR), while Empire City earned over $550 million. In fact, Genting recently opened the $400 million Hyatt Regency JFK adjacent to Resorts World NYC, indicating their anticipation of obtaining a full casino license alongside MGM.
There is a keen interest from other major gaming giants to secure the downstate licenses as well. However, a Spectrum Gaming study conducted earlier this year highlights that converting the existing racinos into full-fledged casinos would discourage investment by a third licensee. Considering the numerous casinos in the Northeast region of the US, finding a suitable candidate for the third license could prove to be challenging.
Furthermore, the existing downstate racinos are relatively remote from Manhattan, which means that even as casinos, they would not fully tap into the potential annual tax revenue that could be generated from the 19 million residents and 60 million tourists (pre-Covid) in the region. Taking into account the transformational impact of Marina Bay Sands in Singapore, the development of a multibillion-dollar integrated resort in or near Manhattan could be a game-changer for New York, helping to revive the economy after the setbacks caused by Covid-19 and fostering new development opportunities.
By offering just one license for a casino in Manhattan while keeping the existing racinos as they are, the state of New York has the best chance to create an iconic gaming and entertainment complex that would not only generate substantial tax revenue but also provide significant economic benefits. This approach would emulate the model adopted by Singapore and allow the spill-over effects to boost the broader economy.
Although some experts argue that multiple licenses should be considered to accommodate the interest of major gaming entities and promote economic growth in the downstate region, others believe that a single license for an iconic casino in Manhattan would be more advantageous in terms of tourism and hospitality.
While it is tempting to estimate the value of a potential New York monopoly and consider raising the license fee above $500 million, it is essential for the state to establish a clear public policy concerning gambling and outline its goals for the gaming industry. Without a comprehensive strategy, New York risks repeating past failures and missing out on the opportunity to create a thriving and responsible gaming market.
The upcoming change in leadership in both the mayoral and gubernatorial positions could potentially bring a new perspective and a more business-friendly approach to the casino industry. However, the implementation of a professional gaming regime that prioritizes sound policy and economic growth over political interests remains uncertain.
As the future unfolds, it will be interesting to observe how New York navigates the path towards casino-game expansion, and whether it can exceed the successes of other major cities such as Chicago.
