When New York City's casino market issued three commercial licenses last December, the industry's expectations were sky-high. Resorts World New York City, Bally's Bronx, and Hard Rock Metropolitan Park were the three to secure entry, with all predictions pointing to one conclusion: this would become the second largest casino market in the U.S., just behind Las Vegas Strip. However, six months later, the reality is much cooler than expected. Resorts World opened its doors on April 28, securing a four-year exclusive operating period, but the excitement in the market cooled significantly once the first two weeks of performance data were released. The PASA official website continues to monitor whether this New York casino battle can fulfill its sky-high initial promises.
Resorts World's early advantage is turning into a stress test
Resorts World is currently the only casino in New York City with table games, theoretically a unique advantage that could last four years. However, the data is not flattering: the casino earned $27.2 million in total gaming revenue in the first six days of operation, but this figure dropped to $26.7 million in the second week. More concerning was the fact that, despite a roughly $25 million increase in slot machine bets, both slot revenue and the average daily win per machine declined. The performance of table games was also not impressive—with a hold percentage of about 13.75% over the first 13 days, compared to 15% on the Las Vegas Strip in March, and baccarat soaring to 20%.
The root of the problem lies in the bidding phase. To secure its license, Resorts World offered a frighteningly high tax rate: 56% on slot machine revenue and 30% on table games. In comparison, Bally's proposed 30% and 10%, and Metropolitan Park even more aggressively at 25% and 10%. Resorts World also paid a license fee of $600 million, a full $100 million above the minimum requirement. More troubling, Resorts World disclosed to CNBC in April that the actual slot machine tax rate had reached 63%, and they had attached a condition during the bidding—that once the other two casinos opened, the tax rate should be reduced to the same level as its competitors. However, the Gaming Facility Location Board outright rejected this, advising Resorts World to stick to the high rates it initially proposed. The board's analysis and recommendations were based on these high tax rates, and it's too late to change them now. Currently, the New York State Gaming Commission has not responded at all regarding what tax rate applies to Resorts World or what the final rates for the three will be.
Delays in construction and financial pressures are a double whammy
Resorts World is bearing the brunt of the pressure alone upfront, while the other two are not idle, just not in operations but in construction progress. Hard Rock Metropolitan Park, an $8 billion mega-project, has been reported by the Queens Eagle to be several months behind the construction schedule submitted during the bidding. The foundation testing, originally scheduled to start on January 1, has yet to begin, and the official start of construction, planned for April 1, has also been delayed. The project spokesperson, Rickitt, managed to stay calm, merely stating "expected to open by 2030," without daring to mention a specific month. The Location Board described this project's timeline as "optimistic" at the time of licensing, considering "the scale of the project and city restrictions"—a comment that was actually quite diplomatic. However, Hard Rock's own development track record is solid, and with the owner of the Metropolitan team, Steve Cohen, being one of the richest men in America, they indeed have the financial strength to withstand setbacks.
Bally's situation in the Bronx isn't much better. Most of the publicly available timeline documents have been redacted, with only the rough start of construction known to be about eight or nine months after the license was granted, around August or September this year, with the same target opening of June 2030. This week's Q1 financial report did provide some solid figures: casino resort segment revenue increased 8% to $380 million, with adjusted EBITDAR slightly up 1% to $96 million. However, the group's overall net loss was a staggering $161 million, at $2.69 per share, far exceeding analysts' expectations of $1.15, while the loss in the same period last year was only $51 million. CEO Robson Reeves mentioned in the financial report that the team is "excited about advancing Bally's Bronx," also outlining a blueprint for a 3 million square foot facility—a luxury hotel with 500 rooms, a 2000-seat event center, and an 18-hole golf course. But the financial pressure is not just about the New York project: potential closures of a temporary casino in Chicago, investments in Australia's Star Entertainment Group, and a potential acquisition of UK's Evoke are all burning money simultaneously. Q1 saw a repayment of a $1.47 billion term loan, followed by a new financing of $1.1 billion, suggesting there might still be room for debt maneuvering, but it's not ample.
Looking at the situation of these three New York casinos, the stakes initially placed were huge, and now every step taken is heavy. Resorts World is struggling under high tax rates alone, and whether this four-year exclusive period is a bonus or a burden will only truly be clear in two or three years. Whether the other two can turn their blueprints into reality on time is also a test not just of construction capability, but of their ability to continuously bleed capital in the market.
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This article is from "PASA-Global iGaming Leaders," a gambling industry news channel:https://t.me/pasa_news
Original in-depth gambling channel:https://t.me/gamblingdeep
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PASA official website: https://www.pasa.news
