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On Monday, the New York State Gaming Commission’s Gaming Facility Location Board settled on two key details regarding licensing fees and minimum capital investment for the three available downstate casino licenses. Applicants must now prepare to allocate $500 million for both the licensing fee and the required capital investment.
The Monday meeting, which only lasted for less than 10 minutes, saw the board unanimously approve these significant financial requirements. Bids for the licenses are also due by June 27, with the commission planning to award them by the end of the year.
Challenges Still Remain Ahead
While applicants will be thankful for this much-needed clarity, they still face additional hurdles before their bids can be finalized. For one, they must complete all entitlement processes, including zoning and environmental reviews, by September 30. This deadline creates a tight timeline, particularly regarding zoning issues that have emerged as a major concern.
Recently, Bally’s Corp received rezoning approval for its Bronx project from both the New York City Council and the state legislature. Meanwhile, Thor Equities and its partners are still waiting on de-mapping approval for their Coney Island proposal, with a vote not expected until at least June 19.
Additionally, all three bids in Manhattan are currently undergoing environmental reviews, adding to the complexities of the application process.
Applicants to Propose Tax Rates
As part of the bidding process, applicants will have the opportunity to propose their own tax rates on gross gaming revenue. The commission has specified that any proposed tax rate must be a minimum of 25% for slot revenue and 10% for all other sources of gaming revenue.
Applicants must hold binding votes by September 30 to secure their bids. Once they receive approval, they will be required to pay a $1 million application fee and submit all relevant materials to the facility-location board, which will then conduct its own review process.
The board will evaluate applications based on four main categories, including economic development, local impact siting, workforce enhancement, and diversity frameworks. Economic development will carry the most weight, accounting for 70% of the decision-making process, while the other categories will each contribute 10%. The board will finalize its selections by December 1.
After the board makes its initial selections, these will undergo a final review by the commission. While three licenses are available, the commission retains the authority to issue fewer licenses or potentially none at all, depending on the outcomes of the evaluations.
Community Support and Endorsement Key
For bidders in New York, significant efforts will be required to secure community support and endorsements, as these are key to meeting the licensing process requirements. Each submitted bid will be paired with a community advisory committee (CAC) tasked with reviewing the application and assessing local support.
According to the New York State Gaming Commission (NYSGC), these committees “will be created to review the application, gauge local support, and ultimately issue a finding determining whether there is adequate support for the proposed project.”
The composition of each CAC will vary depending on whether the project is located within New York City or elsewhere. Each committee will host several meetings to gather feedback and then hold a binding vote on whether a bid can proceed. Approval requires a two-thirds majority.
As New York moves forward with its casino licensing process, it seeks to balance the economic potential of casinos with the need for an attractive business climate. While the minimum appears feasible, the $500 million licensing fee presents a considerable challenge, particularly since new developments will require time to become operational.
With this context, experts are predicting existing racinos as strong contenders for two of the licenses. Moreover, the flexible tax rate indicates a preference for rates that could exceed the established minimums of 25% for slot machines and 10% for table games. New York’s existing 51% tax rate on online sports betting is already among the highest in the nation, but the new downstate casinos will contend with competition from nearby Atlantic City and upstate facilities.
There’s also the fear of legalizing online casinos in the future. While not legal in the state, things can change, and New Jersey has already shown how iGaming can impact land-based casino revenues. This was one of the reasons why Las Vegas Sands and Wynn Resorts withdrew from the bidding process.
Source: iGB
