On Tuesday, MGM Resorts made a surprising move by withdrawing its application for a downstate New York casino license. This decision abruptly puts an end to its ambitious $2.3 billion plan to expand and renovate the Empire City racino.
The announcement came on the same day that MGM was set to submit a revised application to New York’s Gaming Facility Location Board (GFLB). Initially, MGM had submitted its proposal in late June, competing with seven other bidders for the much-coveted New York casino license. By September, it was among the four proposals that had cleared the local committee phase, making it a strong contender.
MGM’s withdrawal represents a significant shift in the landscape, especially considering its next steps were to refine economic projections in response to the competitive environment. However, the company chose to back out entirely, perhaps indicating deeper concerns about the viability of the project.
“The newly defined competitive landscape, with four proposals clustered in a small geographic area, challenges the returns we initially anticipated from this project,” remarked a source close to the situation. The company also expressed that the proposal hinged on a 30-year commercial casino license. Recent guidance from New York State suggests only a 15-year license may be on offer, which is a considerable deviation from MGM’s expectations. This change, combined with other factors, did not align with MGM’s commitment to capital stewardship or its partnership with VICI, their real estate collaborator in Yonkers.
MGM’s exit is the third significant withdrawal in this high-stakes casino race, following Las Vegas Sands and Wynn Resorts. In April, Las Vegas Sands was the first to bow out, citing potential legal challenges with future iGaming legislation in New York. Wynn Resorts followed in May, criticizing New York’s political climate as they exited.
Despite these earlier exits, MGM had pressed forward, advancing through the first two rounds of considerations. Its projected speed to market with a June 2027 opening and existing tax contributions bolstered its application, which received unanimous approval from the community advisory committee (CAC).
Yet, whispers of a possible departure first surfaced when MGM CEO Bill Hornbuckle voiced his concerns at a banking conference in early September. The notion of tying substantial capital investments to uncertain license terms was unsettling, and the delayed approval of key conditions after bid submissions was less than ideal. Hornbuckle also pointed out the requirement to match the property’s current 55% tax rate for the new license, a significant financial implication.
The New York State Gaming Commission has remained tight-lipped about the specific concerns raised by MGM. However, MGM’s apprehensions regarding return on investment are telling. The company is already juggling several large-scale projects in Japan and Dubai, alongside a remodel of its iconic MGM Grand property in Las Vegas.
Notably, MGM proposed the lowest construction costs among the four finalists, with its $2.3 billion bid paling in comparison to Bally’s Bronx’s $4 billion, Resorts World NYC’s $5.5 billion, and Metropolitan Park’s $8 billion projections. Resorts World, like MGM, operates an existing racino and plans a casino launch for July 2026. The other contenders, Bally’s and Hard Rock, are initiating greenfield projects that demand more extensive building timelines and may struggle to achieve rapid profitability.
While Hard Rock has not issued a public response, Bally’s remains optimistic. “We have submitted our supplemental and feel confident that we have put a compelling proposal for the state to consider,” assured Bally’s in a statement. With the recent close of their Bally Intralot transaction, they claim to have a robust balance sheet and over $1 billion in cash and available credit facilities to support the Bronx project.
With MGM stepping out, three applicants remain for the three available licenses. The GFLB is set to review revised applications and provide licensure recommendations by the 1st of December.
This decision casts uncertainty over the future of MGM Empire City in New York without a commercial license. Throughout the application process, MGM emphasized the competitive disadvantage the racino would face against three other commercial licensees nearby. Many Empire City employees even participated in public hearings, advocating for the licensure. The CAC chair, James Cavanaugh, described the racino as “an aging slot parlour” needing a license to remain competitive, a sentiment echoed by Yonkers Mayor Mike Spano.
Since acquiring a video lottery terminal license in 2006, Empire City has contributed approximately $5 billion in state taxes. MGM acquired the property in 2019, just a few years before the downstate licensing process began in earnest.
“We recognize the impact of our decision on numerous individuals; however, we remain committed to operating the property as it currently stands and believe in its continued success serving the Yonkers community,” MGM stated.
As the casino license race narrows, the focus now shifts to the remaining contenders and their revised proposals. With MGM’s unexpected exit, the dynamics of the New York casino landscape continue to evolve, reflecting broader industry challenges and strategic recalibrations. Whether other operators will follow suit or seize the opportunity remains to be seen, as the quest for a New York casino license reaches its final stages.
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