The New York State Gaming Facility Location Board has recommended licenses for the three downstate casino projects, but there is a long way to go for these properties to go from here to opening their doors.
Last week, the board awarded downstate casino licenses to Hard Rock, Bally’s and Resorts World, ending a years-long licensing process that once included eight bidders.
The application was cut down to three casinos earlier this year, with the three bidders required to submit proposals that included both development and community investment plans. Bidders were also required to propose their own tax rates for slots and table games.
Next step: financial stability checks
The next step in the process is for the New York’s gaming regulator is set to initiate an evaluation process into the three bidders’ finances to ensure they can operate a casino in the Empire State. Bally’s, Hard Rock and Resorts World are required to pay a minimum licensing fee of $500 million. The three gaming companies are also required to make a minimum capital investment of $500 million.
The steep financial obligations require the New York State Gaming Commission to assess the financial viability of the bidders before officially awarding the three downstate licenses later this month. The commission is also tasked with evaluating community engagement and responsible gaming plans before formal licensing approval on Dec. 31.
Resorts World leveraging debt to finance project
Resort World’s proposal to expand its existing video lottery terminal facility in Queens raised concerns among the board. Resorts World promised a total capital investment of $3.3 billion for its downstate casino and will pay a $600 million licensing fee, surpassing the commission’s minimum requirement of $500 million for a downstate casino license.
Resorts World is funding its project by relying “heavily on future operating cash flow and future debt financing to fund a substantial portion of development costs,” according to the board. Resorts World has committed roughly $925 million in committed debt financing for its licensing fees and initial capital expenditures, with plans to raise additional debt.
Resorts World proposed a 56% tax rate on slots, one of the highest rates in the country, and a 30% rate on table games. Hard Rock is seeking a 25% rate on slots and a 10% rate on table games, while Bally’s proposes a 30% rate on slots and a 10% rate on table games.
Regulator wants bidders to consider the environment
The three downstate license bidders must complete New York’s State Environmental Quality Review (SEQR) process.
The SEQR is implemented to ensure businesses consider environmental factors when planning and developing projects across the Empire State. The review provides the commission with an outlook to how their development projects will impact the environment, including wetlands, animals and plants. The review incorporates state and local agencies, including the Department of Environment Conservation, the Historic Preservation Office, and zoning and school boards.
It can take up to 30 days to complete the SEQR process with applications subject to public review and comment at the discretion of state and local agencies.
Winners must submit an investment deposit
New York’s gaming regulator is also requiring bid winners to submit deposits based on their total investment plans. The commission mandates Bally’s, Hard Rock and Resorts World to pay a deposit of between 5% and 10% of their pledged total capital investment.
Resorts World proposed a $3.3 billion capital investment, while Bally’s pledged $2.3 billion with roughly 75% of funds allocated toward “Bronx-based firms.” By comparison, Resorts World proposes allocating only 1% of its capital investment toward businesses in Queens.
Hard Rock, which submitted its proposal with Mets owner Steve Cohen, proposed a $5.3 billion capital investment. About 24% of the investment will be distributed to businesses in Queens. Hard Rock plans to build its downstate casino next to the Mets’ Citi Field.
The total costs of community benefits in Hard Rock’s plan are expected to reach $911 million. Bally’s, Resorts World and Hard Rock expect to submit their deposits by Dec. 31.
New York’s gaming regulator will also ensure the three winner bidders are in good legal standing before officially awarding the highly sought-after downstate casino licenses.
