MGM Resorts withdrew its application for a downstate New York casino licence on Tuesday – a shocking development in a process several years in the making. Its $2.3 billion proposal to expand and renovate its Empire City racino is now dead.
The company announced the withdrawal on Tuesday afternoon, the same day its revised application was to be submitted to New York’s Gaming Facility Location Board (GFLB). MGM turned in its original application in late June as one of eight total vying for a coveted New York casino licence. The bid was one of four that cleared the local committee phase in September.
Its next step was to revise its economic projections to reflect the updated competitive landscape. Instead, the company pulled out entirely.
‘The newly defined competitive landscape – with four proposals clustered in a small geographic area – challenges the returns we initially anticipated from this project’
“Also, our proposal to renovate and expand Empire City Casino was predicated on the receipt of a 30-year commercial casino licence but based on newly issued guidance from the State of New York we now expect to qualify for only a 15-year licence. Taken together, these events result in a proposition that no longer aligns with our commitment to capital stewardship, nor to that of our real estate partner in Yonkers, VICI.”
A pattern for New York casino bidders?
MGM represents the third major casino operator to voluntarily exit the New York race. In April, Las Vegas Sands was the first, citing concerns about future iGaming legalisation in the state. Wynn Resorts then followed suit in May, issuing a fiery statement about New York politics on the way out.
MGM stayed the course and advanced through the first two rounds of consideration. Its proposed speed to market of a June 2027 opening and its existing tax contributions made the application a frontrunner. The project’s community advisory committee (CAC) approved the application by a 6-0 vote.
Yet MGM CEO Bill Hornbuckle first raised eyebrows about a possible exit at a banking conference in early September. Hornbuckle balked at the idea of tying capital investments to licence terms and lamented how that was not approved until August, after bids were submitted. The MGM boss also said his property had to match its current 55% tax rate for the new licence.
When asked about that latter point, the New York State Gaming Commission declined to comment.
Lowest bidder cost concerns could be ominous sign
MGM citing concern about returns on investment is notable. The company has ongoing projects in Japan and Dubai, and is remodelling its MGM Grand property in Las Vegas.
Its New York bid had by far the lowest construction cost projections of the four finalists:
- MGM: $2.3 billion
- Bally’s Bronx: $4 billion
- Resorts World NYC: $5.5 billion
- Metropolitan Park: $8 billion
Resorts World is an existing racino like MGM and is proposing a casino launch in July 2026. But the other two are greenfield projects that would take multiple years to build, let alone reach profitability. Both Bally’s and Hard Rock have ongoing development projects elsewhere, and both could come to similar conclusions.
Hard Rock did not respond to a request for comment, but Bally’s sent the following to iGB:
“We have submitted our supplemental and feel confident that we have put a compelling proposal for the state to consider. Post the closing last week of our transformative Bally Intralot transaction, we have a fantastic balance sheet with more than a $1 billion of cash and available credit facilities ready to commit to the project. When combined with readily available project financing and our community investment programme, Bally’s is ready and willing to bet on the Bronx.”
MGM’s withdrawal leaves three applicants fighting for three total licences. The GFLB will be reviewing the revised applications through 1 December, its deadline to make licensure recommendations.
Future of MGM Empire City in New York uncertain
The future viability of MGM Empire City is now in question without a full commercial licence. MGM said repeatedly throughout the process that the racino could not compete with three other commercial licensees nearby.
Dozens of Empire City employees went to public hearings to testify in support of licensure. The project’s CAC chair, James Cavanaugh, called the racino “an aging slot parlour” that needed a licence to compete prior to casting his vote in support. Yonkers Mayor Mike Spano advocated for a commercial licence for years.
Empire City has contributed roughly $5 billion in state taxes since obtaining a video lottery terminal licence in 2006. MGM purchased the property in 2019, a few years before the downstate licensing process began.
“We know our decision will impact many individuals; we remain committed to operating the property in its current format and believe it will continue to enjoy success serving customers in Yonkers and the surrounding communities,” the company said in its statement.
Citing competition concerns and reduced economic projections, MGM withdrew abruptly from the NY casino race.