New York casino licenses draw bids from real estate titans

By Aaron Elstein

In 2019 top Las Vegas executives gathered around a table in Albany. They didn’t come to play craps or poker but to remind state lawmakers they would be pleased to invest in New York City whenever the door opened.

“A guy from Las Vegas Sands said he’d pay almost $1 billion for a license in New York City upfront and right now, even though he knew he couldn’t get it for four years,” recalled state Sen. Joseph Addabbo, a Queens Democrat.

Restraint was built into the 2013 law that brought casino gambling to the state. Under the statute, four fledgling upstate casinos got a head start of seven years before the state could think about licensing any casino downstate.

But last year, one year early, lawmakers concluded building casinos in New York City sooner would accomplish two things: The state would get a big wad of cash, and thousands of union jobs would be created. So the licensing process for three downstate casinos was accelerated. Starting in January, a dozen or more developers could bid for the power to run the city’s first full-service casino as soon as 2024.

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“It’s the holy grail,” said Nick Antenucci, a gaming lobbyist and senior counsel at Davidoff Hutcher & Citron. Wherever it lands, a New York casino is “the largest land-based gaming opportunity in years,” CBRE senior analyst John DeCree wrote in April.

The financial estimates are real and they’re spectacular: A casino in the five boroughs could generate $2 billion in yearly revenue and $600 million in operating earnings, CBRE said, and deliver a 20% annual pretax return after $3 billion in licensing and construction costs.

No wonder New York casino licenses are as sought after as Willy Wonka’s golden tickets.

Bidding for one of the three downstate casino licenses starts at $500 million, or more than four times higher than downtown Chicago, according to Fitch Ratings. But bids could come in higher because, three years after a Las Vegas executive put in a nearly $1 billion ante for a license, the gambling business has gotten only better. Taxable gross revenue in Las Vegas in the most recent fiscal year was 25% higher than in 2019.

It’s understood that that two of the three downstate licenses are likely going to the racinos—racetracks with slot machines— in Yonkers and at Aqueduct in Queens. If the Empire City Casino in Yonkers could also offer table games and sports betting, CBRE said, revenue would quickly double 2019’s $600 million. The Resorts World New York City Casino at Aqueduct generated about $850 million in gross gaming revenue last year, the most of any casino outside Nevada, the American Gaming Association said. Not only are the racinos successful, but they already have relations with the gaming commission, said Gambling.com analyst Lou Monaco.

Titans in the city’s real estate industry have spent the past year forming alliances with gaming companies in an effort to secure the final license. Office landlords The Related Cos., SL Green Realty and Vornado Realty Trust have teamed up or are rumored to be partnering with Las Vegas operators to bid for casinos in Hudson Yards, Times Square or Herald Square, respectively. Billionaire Mets owner Steve Cohen reportedly wants a casino near Citi Field and is believed to favor Hard Rock for a partnership. The next phase of the Willets Point redevelopment project which includes a new soccer stadium, hotel and affordable housing project next to Citi Field could complicate those plans. Real estate developer Joe Sitt of Thor Equities has set aside land he owns on Coney Island and developers of sites near the Staten Island Ferry Terminal and Belmont Park are also expected to throw their hats in the gambling ring.

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In addition to picking an operator, the state needs to decide whether its top priority is helping Midtown or an outer borough.

If revenue-maximization is the goal, then it would be wise to mimic the racino at Aqueduct. While the 6,500 slot machines and a 28-by-16-foot TV screen said to be the largest in Queens are surely draws, the casino is successful in part because it’s isolated from the rest of the city and customers have literally nowhere else to go.

“A casino in the outer boroughs would be the biggest attraction in that borough ever, and Mayor [Eric] Adams is looking for a legacy project,” a proponent said.

Addabbo, chairman of the state Senate Racing, Gaming and Wagering committee, said the state’s choice of location comes down to putting a casino where people are or where you want them to go.

“There are two theories about that,” he said, “at least.”

A split business community

Would a casino be good for business in Midtown? The business community is split on that question.

Caroline Hirsch, owner of Caroline’s on Broadway, said crowds are down 30% at her comedy club. She supports a casino to lure visitors back to Times Square, she said.

“If there’s a better idea, I’d like to hear it,” Hirsch said.

But some including the Broadway League, which represents theater owners, operators and producers, oppose the plan. A casino would “overwhelm the already densely congested area and would jeopardize the entire neighborhood whose existence is dependent on the success of Broadway,” it says.

On the other hand, the Actors’ Equity Association, which represents Broadway performers, says gaming would be a “game changer” and supports SL Green’s bid to develop Caesars Palace Times Square.

The Times Square Alliance, which represents the business interest of the Times Square neighborhood, isn’t publicly taking a stance on whether a casino in that area is a good move, its chief executive Tom Harris said.

A spokesperson for the Durst Organization, which owns several buildings in Midtown, said its office tenants have expressed concerns over the compatibility of a casino and the operations of their businesses.

A few blocks to the east and south, the Water Club has pitched a possible site along the East River. The bid is “vehemently opposed” by Community Board 6, Chairman Kyle Athayde said.

“The high rollers that the Water Club is targeting will not benefit the retail or commercial establishments in the area,” the community board said in an April resolution to the state Gaming Commission.

These disagreements could matter a lot because under the law casino bidders must demonstrate evidence of community support and zoning approval is required.

A wild card is whether casino bidders will be subject to the city’s uniform land use review procedure. That gets the City Council involved and is how concessions or financial contributions are extracted from developers in exchange for a community’s support. Developments on state-owned land could avoid the review procedure, and if they do, racinos would be positioned to become full-service casinos more quickly than others.

“Speed to market is always an advantage,” said Antenucci, the gaming lobbyist.

Advantage, wherever a casino lands, goes to the hotel workers union.

Because neither business nor international travelers have returned in large numbers, 15,000 city hotel workers, or 28% of the workforce, haven’t returned to their jobs, according to figures from Oxford Economics. Rich Maroko, who succeeded longtime boss Peter Ward as head of the Hotel Trades Council in 2020, figures casinos are the future for his 40,000 members, and last year he renamed the organization the Hotel and Gaming Trades Council.

“We wanted the name to reflect the reality of who we are and who we could be,” Maroko said.

About one-tenth of his members work in casinos and each new facility promises at least 1,000 additional jobs paying $38 an hour, plus benefits and a pension. The hotel workers union was the first union to endorse Eric Adams for mayor and ensured that the new casinos will employ organized labor. The law hastening their arrival directs New York gaming officials to award points to bidders who have union agreements and detailed plans for assuring “labor harmony.”