Long considered a shoo-in for one of three casino licenses up for grabs in New York, MGM Resorts has dropped out of the competition.
The company, which pitched a $2.3 billion expansion of its facility in Yonkers, announced Tuesday that it is withdrawing its proposal.
The news comes as a surprise, after a community advisory committee unanimously approved the proposal last month. The casino, alongside another existing slot parlor, Queens Aqueduct Casino, seemed best positioned to snag two of the available state licenses, given that they already had operating facilities.
But in a statement, MGM blamed the decision on “a newly defined competitive landscape,” pointing to the fact that the remaining proposals were clustered in a “small geographic area.”
All of the remaining competitors are located in the outer boroughs: the Queens Aqueduct, Steve Cohen’s Metropolitan Park in Flushing and Bally’s Bronx project.
The company also banked on receiving an initial 30-year license, but based on rules issued by the state last week, the Yonkers proposal would only qualify for 15 years.
The length of the license coincides with how much an applicant is investing in the project. MGM pegged theirs at $2.3 billion, with $1.8 billion in capital investments.
“Since submitting our application in June, the competitive and economic assumptions underpinning our application have shifted, altering our return expectations on the proposed $2.3 billion investment,” the company said in a statement.
Given these concerns, MGM also likely wouldn’t have been able to propose competitive tax rates for the slot machines and table games. Each of the teams submitted rate proposals to the state on Tuesday. Resorts World pitched a 56 percent tax for slots and 30 percent for table games. Metropolitan Park’s team proposed 25 percent for slots and 10 percent for table games. The documents submitted by Bally’s were redacted.
Under the rules, in order to qualify for 30 years, an applicant would need to invest at least $10 billion. The projected investment in Resorts World’s Queens Aqueduct is $7.5 billion; $8 billion for Metropolitan Park; and for Bally’s, $4 billion.
Crain’s was first to report MGM’s decision.
Last month, community advisory committees whittled down the competition from eight proposals to four. Now, the state’s Gaming Facility Location Board will review the applications, assessing them based on four categories, including “economic activity and business development,” which carries the most weight.
The board is expected to select licensees by Dec. 1. Though MGM’s exit means three teams are now competing for three potential licenses, state Gaming Commission Chair Bill O’Dwyer has made clear that the state does not have to award three licenses; it simply has the option to grant up to three.
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