Long considered a shoo-in for one of the three casino licenses up for grabs in New York, MGM Resorts has withdrawn from the competition.
The company, which proposed a $2.3 billion expansion of its Yonkers facility, 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 arcade, Queens Aqueduct Casino, appeared best positioned to secure two of the available state licenses as they already had operational facilities in place.
But in a statement, MGM blamed “a newly defined competitive landscape,” pointing to the fact that the remaining proposals were clustered in a “small geographic area.”
All other competitors are in the suburbs: the Queens Aqueduct, Steve Cohen’s Metropolitan Park in Flushing and Bally’s Bronx project.
The company also counted on receiving an initial 30-year license, but based on state rules last weekthe Yonkers proposal would only be eligible for 15 years.
The duration of the license depends on how much an applicant invests in the project. MGM estimated theirs at $2.3 billion, with $1.8 billion in capital investments.
“Since we filed in June, the competitive and economic assumptions underlying our filing have shifted, changing our return expectations on the proposed $2.3 billion investment,” the company said in a statement.
Given these concerns, MGM also likely would not have been able to propose competitive tax rates for its slot machines and table games. Each of the teams submitted rate proposals to the state on Tuesday. Resorts World introduced a 56 percent tax on slots and 30 percent on table games. The Metropolitan Park team suggested 25 percent for slots and 10 percent for table games. The documents submitted by Bally’s have been redacted.
Under the rules, to qualify for 30 years, an applicant would have to invest at least $10 billion. Resorts World’s expected investment in Queens Aqueduct is $7.5 billion; $8 billion for Metropolitan Park; and for Bally’s $4 billion.
That was Crain’s First to report MGM’s decision.
Last month, community advisory committees reduced the competition from eight to four proposals. Now the state’s Gaming Facility Location Board will review applications based on four categories, including “economic activity and business development,” which carry the most weight.
The board is expected to select licensees on December 1. Although MGM’s departure means three teams are now competing for three potential licenses, Gaming Commission Chairman Bill O’Dwyer has made it clear that the state does not have to award three licenses; it simply has the ability to grant to three.
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