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Empire City out
CEO Steve Hornbuckle might have given a hint at a September banking conference, but MGM Resorts’ withdrawal for a downstate New York casino license has still come as a shock.
pulling its $2.3bn Yonkers racino bid
Hornbuckle expressed his dissatisfaction of tying capital investments to NY licence terms last month, a point of contention that influenced MGM’s announcement Tuesday afternoon that it was pulling its $2.3bn Yonkers racino bid, named Empire City.
The move leaves just three bidders for three available downstate licenses, with the Genting-owned Resorts World New York City in Jamaica already a virtual shoo-in because of existing racino infrastructure.
Empire City’s withdrawal, however, has industry experts asking whether two remaining firms in the final bidding mix, Bally’s and Hard Rock International, might be getting similar cold feet. Bally’s $4bn Bronx bid and Hard Rock/Steve Cohen’s $8bn Queens bid are both greenfield projects that would, however, take years to develop and even longer to reach profitability.
Reasons for withdrawal
MGM Resorts is the third major US casino brand to exit the NY race after Las Vegas Sands and Wynn Resorts withdrew their bids in April and May respectively. It has ongoing cash-thirsty projects, such as an MGM Grand revamp and Japan and Dubai casino projects. MGM’s parting note centered on its cash stewardship.
In a Tuesday statement, MGM said its Empire City bid was based on receiving a 30-year casino license but that after “newly issued guidance from the State of New York we now expect to qualify for only a 15-year license.”
In its farewell to NY, MGM also stated its Yonkers bid along with the remaining Queens, Bronx, and Jamaica bids represented a “newly defined competitive landscape.” The Vegas-based casino giant said all remaining projects were “clustered in a small geographic area” which impacted the profits MGM originally expected to make.
no longer aligns with our commitment to capital stewardship
MGM Resorts said the licensing issues and potential casino congestion “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.”
Bally’s upbeat
In contrast to MGM, Bally’s appears full of confidence in its New York prospects, buoyed by a major recent cash injection.
In a comment to iGaming Business, the firm said it had put forward “a compelling proposal for the State to consider.” Without mentioning any concern about returns on investment, Bally’s instead pointed to its “fantastic balance sheet” with more than $1bn in cash and “available credit facilities ready to commit” to its Bronx casino.
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