MGM Resorts unexpectedly announced its withdrawal from the New York State casino license competition, retracting its $2.3 billion renovation plan for the Empire City Racetrack Casino. The company was originally one of the four finalists, and the withdrawal was due to concerns about the newly defined competitive landscape and the license term being shortened from the expected 30 years to 15 years, resulting in a project return that does not meet capital management requirements. With MGM's exit, only Bally's Bronx, Resorts World New York, and Metropolitan Park remain in the competition for three licenses. The New York State Gaming Facility Location Board (GFLB) will review the revised applications and make licensing recommendations by December 1. MGM stated that it will continue to operate the Empire City Casino in its current form but expressed concerns about its long-term competitiveness.
Decision to Withdraw and Official Statement
MGM Resorts formally withdrew its casino license application in southern New York State on Tuesday, ending a bidding plan that had been brewing for years. The company had originally planned to invest $2.3 billion to expand and renovate the Empire City Racetrack Casino, but ultimately decided to withdraw from the competition.
The company stated in its announcement that the newly defined competitive landscape and changes in license terms pose challenges to project returns, not aligning with its capital management commitments.
Competitive Landscape and License Term Changes
MGM's decision to withdraw was based on two key factors: the concentration of four proposals in a small geographic area leading to intensified competition, and New York State's latest guidance shortening the commercial casino license term from the expected 30 years to 15 years.
These changes significantly affected the expected returns of the project, making the $2.3 billion investment no longer meet the financial standards of MGM and its real estate partner VICI.
Historical Background and Early Progress
MGM is the third major operator to withdraw from the New York casino bidding, following Las Vegas Sands and Wynn Resorts. MGM had persisted through the first two rounds of review, and its application had been approved by the local committee.
The company's proposed opening timeline of June 2027 and new tax contribution commitments had previously put its application in a leading position, with the community advisory committee approving the application with a 6-0 vote.
CEO's Early Doubts
MGM CEO Bill Hornbuckle had already expressed doubts about a possible withdrawal at a banking conference in early September. He was hesitant about linking capital investment with license terms and complained that the proposal was only approved after submitting the bid in August.
Hornbuckle also noted that the Empire City Casino would need to comply with a new 55% license tax rate, further increasing financial pressure.
Remaining Competitors and Investment Scale
With MGM's exit, only three competitors remain: Bally's Bronx (investing $4 billion), Resorts World New York (investing $5.5 billion), and Metropolitan Park (investing $8 billion). MGM's $2.3 billion investment plan was the lowest among the four.
Resorts World, like MGM, is an existing racetrack casino, planning to open in July 2026, while the other two are new projects requiring more time to become profitable.
Financial Considerations and Capital Allocation
MGM's concerns about investment returns reflect its global capital allocation strategy. The company currently has ongoing projects in Japan and Dubai and is renovating the MGM Grand Hotel in Las Vegas, requiring careful management of multiple large investments.
The company's statement emphasized that the decision to withdraw aligns with its commitment to capital management, ensuring resources are allocated to projects with the highest potential returns.
Future Operations of Empire City Casino
MGM stated that it will continue to operate the Empire City Casino in its current form, but acknowledged that the lack of a full commercial license will affect its long-term competitiveness. The company purchased the property in 2019, prior to the start of the licensing process in the southern region.
Since obtaining a video lottery terminal license in 2006, Empire City has contributed approximately $5 billion in taxes to New York State, but MGM has repeatedly stated that the casino cannot compete with nearby commercial license holders.
Industry Reaction and Competitor Confidence
Bally's told iGB that its submitted supplementary proposal is compelling, with the company having over $1 billion in cash and available credit lines to invest in the project. The company emphasized that it has completed the transformative Bally Intralot transaction, with an excellent balance sheet performance.
Hard Rock has not yet responded to requests for comment, but the remaining competitors have all expressed confidence in their respective plans and implementation capabilities.
Review Timeline and Next Steps
The New York State Gaming Facility Location Board (GFLB) will review the revised applications and make licensing recommendations by December 1. This is the final deadline for the committee to make recommendations.
The review will assess the economic impact, community benefits, and feasibility of implementation of each proposal, ultimately deciding the allocation of the three licenses.
Policy Environment and Tax Rate Impact
The New York State Gaming Commission has refused to comment on the new 55% license tax rate, which is significantly higher than many other jurisdictions. The high tax rate environment may continue to affect investor interest in the New York gaming market.
Policy uncertainties include the potential legalization of online gaming in the future, which was one of the reasons Las Vegas Sands previously withdrew.
Community Impact and Employee Concerns
Dozens of Empire City employees attended a public hearing to testify for the issuance of the license. Yonkers Mayor Mike Spano has been advocating for a commercial license for years, considering it crucial for local economic development.
Community Advisory Committee Chairman James Cavanaugh once described the racetrack casino as an "outdated slot machine casino" that needs a license to remain competitive.
Market Impact and Industry Signals
MGM's withdrawal sends a signal to the gaming industry, indicating that the New York market may face challenges in investment returns. Large operators' concerns about stringent license terms and competitive environments may affect future investment decisions.
The remaining competitors need to prove that their plans can achieve sufficient returns in this environment to secure a license and successfully implement the project.
