Why the New York Casino Licensing Process Failed, Mirroring Japan’s Unsuccessful IR Rollout

Key Points: Understanding the complexities of the industry requires careful attention to several critical stages, most notably the rigorous requirements of casino licensing. These key points detail the essential steps involved in navigating the legal hurdles and regulatory frameworks necessary to secure your casino licensing and manage the entire operation efficiently and legally.

• New York’s casino licensing process has largely been a bust.
• State’s sluggish procedures curbed enthusiasm among major players, including Sands, Wynn, and MGM.

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Once viewed as the most coveted untapped casino market in the United States—and perhaps the globe—downstate New York has seen its licensing process become a farce. The state was meant to award three licenses for New York City, Long Island, or Westchester County, yet the process has dragged on so long that even the most optimistic license hopefuls are growing disheartened. State officials now have only three bids to consider, and alarming whispers suggest that another bidder might soon bow out.

In 2013, New York’s gaming bill allowed for the establishment of up to four casinos upstate and three downstate, with a 10-year exclusivity for upstate casinos regarding competition downstate. However, the moratorium on downstate slots and table-game concessions was only lifted in February 2023—after which almost 1,000 days passed without any licenses being awarded.

This state of inertia reveals further complications: local pushback against new casinos, the state’s deliberations on introducing iGaming options, and deciding to grant licenses for only 15 rather than 30 years, have all contributed to a decline in interest from major casino players.

The Japan Connection

The circumstances surrounding New York’s casino licensing evoke parallels with Japan’s experience. In 2018, Japan’s lawmakers voted to permit up to three integrated resort casinos. Initially heralded as a groundbreaking opportunity since Macau’s casino market opened in 1999, Japan’s slow rulemaking and bidding progress led nearly all developers except MGM Resorts and Casinos Austria to abandon their plans. Ultimately, the only approved project was the MGM Osaka bid, leaving two permits still unissued.

As in Japan, Las Vegas Sands was the first to withdraw from the New York race. Likewise, Wynn Resorts also opted out of its bids prior to the call for bids.

New York State Senator Joseph Addabbo, a proponent of the 2013 casino legislation, has urged swift action following MGM’s recent withdrawal of its Empire City Casino bid in Yonkers. Currently, only Resorts World’s project at Queens Aqueduct Racetrack, Hard Rock’s bid at Willets Point, and Bally’s Bronx remain active considerations.

Addabbo insists that the New York Gaming Facility Location Board must expedite awarding the three licenses to maximize the casino-related tax revenue, employment opportunities, and regional economic growth. “I don’t see why the state wouldn’t award the last three licenses to the last three applicants,” he stated.

MGM’s Exit: A Silver Lining?

Barry Jonas from Truist Securities assessed the implications of MGM’s departure, suggesting it may benefit investors. Concerns over a potential “winner’s curse” lingered, especially considering the location of the Empire City Casino, which is notably further from Manhattan than the remaining bids, potentially hindering its competitiveness.

“We see this as a positive for MGM, which now frees up capital for potentially better uses,” Jonas noted.

Jonas further questioned whether all, some, or any of the remaining bids will secure licensing. This uncertainty creates an atmosphere of conflict over future casino developments in the state.

As New York grapples with its casino licensing conundrum, a lack of action mirrors not only the systemic uncertainties seen in Japan but also reflects widespread frustrations over governmental inefficiencies and stakeholder confidence. The route to reviving New York’s once-bright prospects for entering the casino market is strewn with obstacles, demonstrating the complexities involved in the interaction of policy, public sentiment, and investment interests.

Conclusion

The New York casino licensing process remains a study in frustration, closely reflecting Japan’s imperfect rollout of integrated resorts. As interests wane and potential licensees reconsider their positions, it becomes increasingly clear that substantial reform and proactive governance are essential to reinvigorate the market’s potential. The implications of this stagnant process could reverberate throughout the gaming sector, stressing the need for strategic action from lawmakers and regulators alike.