- MGM Resorts International (NYSE: MGM) has withdrawn from the New York City casino licensing process, raising questions about Resorts World New York’s outlook
- Genting’s expansion plan for its Queens property includes a proposed investment of $5.5 billion plus $2 billion in community benefits
- Genting’s bid features a $600 million license fee and tax rates among the highest in the U.S. casino sector
Key Moments
The competition for New York City’s highly sought-after casino licenses took a dramatic turn when MGM Resorts International (NYSE: MGM) decided to exit the race. This decision has sparked heightened scrutiny regarding the prospects for Resorts World New York, operated by Genting, and the wider economics of operating a casino in the region.
Market Challenges for Genting
Resorts World New York, a slots-only venue managed by Genting, has been regarded as a leading candidate for one of the three downstate New York licenses. However, industry analysts are now questioning whether MGM’s departure reflects deeper concerns about the financial viability of these licenses, especially given Genting’s mixed track record with some of its other North American operations.
Nomura analyst Tushar Mohata observed, “Given that some of Genting Malaysia’s Resorts World assets like Resorts World Catskills, Resorts World Bahamas and Resorts World Las Vegas also have sub-par returns, one might also question the economics of a multi-billion dollar potential Resorts World NYC expansion.”
Details of Genting’s Aggressive Bid
Should Genting receive a license, it has committed to a $5.5 billion transformation of its current Queens facility into a Las Vegas-style casino, not factoring in an additional $2 billion for community investments. This figure exceeds the amount Genting spent constructing Resorts World Las Vegas.
MGM cited concerns about the unfavorable economics of the New York licensing process as key to its decision, especially after the license term was shortened to fifteen years from thirty, while the expectation remains that winners pay $500 million for the permit.
Nomura has called Genting’s approach “aggressive,” noting that its proposal includes a $600 million license fee—20% above the minimum requirement—and some of the sector’s steepest tax rates: 56% on slot revenues and 30% on table game earnings. According to Nomura’s Mohata, “Genting’s supplemental bid ‘revealed aggressive terms, including a US$600 million license fee (versus the minimum requirement of US$500 million) and industry-leading tax rates of 56% on slots and 30% on tables. These rates significantly exceed those proposed by the other candidates.’”
Despite these elevated financial commitments, Genting is making these offers voluntarily, even as MGM’s public withdrawal brings the underlying economics of such investments into question.
| Bid Component | Genting’s Proposal | Minimum/Previous Terms |
|---|---|---|
| License Fee | $600 million | $500 million |
| Slot Tax Rate | 56% | Lower rates (unspecified, per other bids) |
| Table Game Tax Rate | 30% | Lower rates (unspecified, per other bids) |
| Investment in Property | $5.5 billion | Not specified |
| Additional Community Benefits | $2 billion | Not specified |
| License Term | 15 years | 30 years (previously) |
Geographic Competition and Risks
MGM also raised the issue of location within the competitive landscape—a point that directly impacts Genting’s prospects. The proposed $8 billion Metropolitan Park project, spearheaded by Steve Cohen and Hard Rock International, would be situated just 10 miles away from Resorts World New York and is considered a strong contender for a license. Analyst Mohata commented that such proximity could threaten Resorts World New York’s market share if Metropolitan Park is approved.
“The full project return on invested capital impact will not be clear for several years given the staged nature of the capital deployment,” Mohata concludes. “Genting Malaysia’s phased development approach should better its capital management and help to mitigate risks.”
- Author
Daniel Williams
