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All Bets Are Off As NYC's Casino Bidding Process Heats Up

The whales of New York development and Las Vegas gaming are getting ready to put their chips on the table in a high-stakes bidding process for the rights to build a casino in or near New York City.

With three licenses up for grabs and permission to build in the largest U.S. city on the table, the teams willing to ante up at least $500M — and promise far more than a straightforward casino and hotel — will get a shot at the jackpot.

Related, SL Green, Thor Equities, Vornado, RXR Realty, the Soloviev Group and even Saks Fifth Avenue have been linked to possible bids for the downstate casino licenses, for which the state launched the application process this month. The developers’ proposals are dotted throughout Manhattan, Brooklyn, Queens and Long Island.

Their bids vary, offering everything from theaters to a Ferris wheel and museum as part of their packages accompanying the casinos. But one thing all proposals have in common is that they will likely miss their revenue projections.

“To get the license, you have to be optimistic,” said Jeff Gural, chairman of GFP Real Estate and owner of upstate casino Tioga Downs. “You're giving the state projections. They're looking to give the license to the casino that'll maximize revenue.”

A rendering of the proposed development from the Soloviev Group, featuring a Ferris wheel and a museum dedicated to democracy at a site near the U.N. building in Midtown Manhattan.

The bidding process will likely be intensely competitive. In addition to a $500M license fee and $500M investment, bidders will have to emphasize how their proposals will benefit the local economy, maximize regional tourism, incorporate live entertainment, and explain how they will mitigate how their plans could affect municipalities’ local economy, existing infrastructure, housing stock and nearby businesses.

“This is an opportunity to recharge downstage communities,” Gov. Kathy Hochul said during a televised debate with Republican opponent Lee Zeldin prior to the 2022 midterm elections. “We have the opportunity to create thousands of jobs. A lot of New York City workers were in the hospitality field, and worked in entertainment and places where they still haven’t come back yet because of the pandemic, that we can give them jobs working in these places as well as generating more revenues for our children to be able to get a good education.”


An Economic Gamble

In spite of developers’ enthusiasm for their potential plans, academics say the Northeast’s casino market is already saturated. Far from boosting the local economy, a successful casino could actually suck economic activity out of an area, said Clyde Barrow, a casino expert and chair of the University of Texas Rio Grande Valley’s political science department.

Casinos will always give an area a slight economic boost when they open due to job growth and a change in spending patterns in the area, he said — but those changes in spending patterns don’t always equate to more money flowing into an area. 

“A very significant proportion of any new gaming facilities revenues will come from existing facilities, which means you're not going to be collecting revenue from those other facilities, and they're going to lose jobs,” he said. “So there will be negative impacts elsewhere in the state. We've seen this over and over and over again. We've seen it in Atlantic City, for example, and in Pennsylvania.”

Another factor that could hurt casinos in NYC is the competition, Barrow said. Casinos in densely populated urban areas tend to fare poorly, as they are already in competition with live music, theater, tourist attractions or bars. Failing to account for the competition could lead to developers overestimating their projected revenues — something that has already affected casino performance in Los Angeles, Barrow said.

“The competition for those dollars is much more intense, because people just have so many other options on how to spend their entertainment dollars,” he told Bisnow. “The models are always going to come in overly optimistic. You're going to attract tourists and you're going to attract business travelers, but the reality is nobody goes to New York City to gamble at a casino.”

Related Co.'s Hudson Yards could be one of several sites to become home to a NYC casino.

New York state only legalized casinos a decade ago, allowing for seven in total. In 2014, four of those licenses were awarded to casinos upstate. But even without the competing nightlife, the upstate casinos haven’t fared as well as expected: All three of the casinos that are still open missed their first-year projected revenues by more than 25%, according to reporting from the Democrat & Chronicle from 2018.

The Del Lago casino, roughly 50 miles east of Rochester, ended its first year with $147M in revenue, missing its projections by 44%. Rivers Casino & Resort in Schenectady missed the mark by 37% off its $222M prediction. And Tioga Downs, just over the Pennsylvania border, reported $74M compared to its $103M prediction, falling 28% short of its goal.

“I assumed they were accurate, I had no idea. I’m not really a casino guy,” Gural told Bisnow regarding how Tioga Downs had managed to miscalculate revenue by such a large margin. “But most of the people who seem to be applying for a license are hooked up with major casino companies, so don't put me in the same category as them. They have a wealth of variants running casinos. I had to learn on the ground.”

Gural told Bisnow that in 2022, Tioga Downs met its projected revenues for the first time since it opened six years ago. But a Bisnow review of data reported to the state Gaming Commission for the most recent complete fiscal year showed little improvement in net revenues reported by each of the three upstate casinos. From April 2021 through March 2022, the Del Lago casino brought in $119M in net revenue, Rivers Casino & Resort collected $141M and Tioga Downs earned $65M.

The downstate bidders may have to be less optimistic than their upstate counterparts when it comes to their projected revenues, Joelle LeClaire, a professor of economics and finance at SUNY Buffalo State University, told Bisnow.

Whatever numbers are given to the state during the bidding process, the partnerships hoping to build casinos still have to get loans approved for complex capital stacks, she said — meaning borrowers are accountable to multiple parties.

“Your numbers can't be completely off,” LeClaire said. “They have to be believable.”

Thor Equities could spend as much as $3B redeveloping Coney Island as part of its casino bid.

The Players

New York state began the process for licensing city casinos last year, having approved casinos in the state nine years prior. Earlier this month, it put out its request for applications for bids. The New York Gaming Facility Board, which is overseeing the solicitation process, said that the only deadline being set for the meantime was Feb. 3, when it will stop accepting its first round of questions.

In between the state kicking off the siting process and the board beginning to accept applications, the city’s biggest developers pulled seats up to the table. 

Related Cos. was one of the first developers to roll the dice, with plans to submit a bid for a casino in Hudson Yards’ undeveloped western portion, along with a resort and unspecified entertainment facility. The developer is positioning its proximity to Penn Station and the Jacob K. Javits Center, as well as its partnership with Wynn Resorts, as its biggest strengths.

“This resort project will kickstart development of the Western Yards, which will be the most impactful economic engine in New York for the next decade, and will yield the highest tax revenue per visitor for the City and State,” spokespeople for Related and Wynn told Bisnow in a joint statement.

Thor Equities announced its own bid in July to bring a casino to Brooklyn's Coney Island neighborhood that would bring a casino, hotel, museums, a roller coaster and an indoor water park to the neighborhood. The developer could spend as much as $3B redeveloping a 5-acre area between Stillwell Avenue, West 12th Street, Surf Avenue and Wonder Wheel Way, Commercial Observer previously reported. Thor declined to comment on its plans.

SL Green threw its hat into the ring in October, with a bid featuring a casino venue on top of the Palladium Times Square theater, and partnerships with Caesars Entertainment and Jay-Z's Roc Nation. 

“This is a once-in-a-lifetime opportunity to make a meaningful investment in the future of Times Square,” Brett Herschenfeld, SL Green’s executive vice president of retail and opportunistic, wrote in an email. “It would generate $967 million in annual area spending, providing a much-needed boost to area hotels, theaters, restaurants, and businesses.”

Citi Field during a New York Mets vs. Washington Nationals game in August 2019

The Soloviev Group also got involved in late 2022, proposing a casino in Midtown Manhattan on an undeveloped site near the U.N. building. The proposal also includes a Ferris wheel, a museum dedicated to democracy, a hotel and community green spaces.

“We're not building just a casino. We're building an entertainment center that will be very community-oriented. We have better transportation, better access to the city: we're near the tunnels, we're near the bridges, we can have ferry service,” Soloviev Group CEO Michael Hershman said in an email. “We are shovel ready. We have zoning in place for both residential and commercial. And we can begin work almost immediately upon receiving a license."

Earlier this month, Las Vegas Sands pushed a big stack of chips into the pot, signing a lease to redevelop the Nassau Coliseum on Long Island into a casino surrounded by outdoor community spaces, four- and five-star hotel rooms and a live performance venue. It is joined on the project by RXR Realty.

Vornado Realty Trust CEO Steve Roth also wants in, telling the New York Post earlier this week about his visions for a casino at the site of the soon-to-be-demolished Hotel Pennsylvania. The site is also part of Hochul’s Penn State redevelopment plan, where Vornado is lined up to develop five of the eight office buildings in the state's controversial area redevelopment proposal.

New York Mets owner Steve Cohen also reportedly wants to put a casino near Citi Field. The Willets Point neighborhood home to the baseball stadium has transformed in the past decade, with the city flushing $50M into local infrastructure. Now, the billionaire and Mayor Eric Adams are keen to capitalize on the neighborhood's increased accessibility — with a planned soccer stadium and perhaps a casino.

The most unusual bidder is Hudson's Bay Co., the parent of Saks Fifth Avenue, which wants to redevelop the top floors of the company's iconic department store near Rockefeller Center as a Monte Carlo-style, upscale casino destination, The New York Times reported.

As for whether or not the eventual winners can make running a casino worthwhile, Gural said that bidders’ partnerships with casino companies gives them a better chance of accurately predicting their revenues. Still, he said, figures submitted to the state should be taken with a pinch of salt.

“A lot of it is based on guesswork,” he said.