The competition for casino permits in New York City is heating up, with potential operators facing not only the challenge of securing licenses but also the looming financial risks involved. According to a recent report from S&P Global Ratings, successful bidders may find themselves burdened with substantial debt as they embark on their casino projects.
The New York state government is preparing to award three downstate casino licenses, marking a significant opportunity in the gaming industry. Major players such as MGM Resorts International, Las Vegas Sands, and Wynn Resorts are all vying for the chance to secure these lucrative licenses.
The financial implications of these projects are significant, with proposed costs ranging from $2 billion for expansions or redevelopments to over $5 billion for entirely new developments. S&P Global Ratings has highlighted concerns about the strain on corporate credit metrics as companies strive to establish themselves in the competitive New York market.
Rumors have suggested that winning bidders could face record-breaking licensing fees of up to $1 billion each, far exceeding the initially anticipated cost of $500 million per permit. When factoring in construction costs, operators like Las Vegas Sands and Hard Rock International could be looking at total investments of up to $6 billion and $8 billion, respectively.
Despite the financial challenges, experts believe that New York offers a long-term gain scenario for successful operators. Dominating the New York market is seen as a strategic move that could yield significant returns in the future. However, the timeline for these developments is extended, with S&P suggesting that licenses may not be awarded before the second half of 2024, and significant capital spending is not expected until 2025.
Overall, the race for New York City casino permits represents a high-stakes gamble for potential operators, as they navigate the financial risks and rewards associated with this coveted opportunity.