Wynn Withdraws New York Bid Amid Challenges Securing Casino Licenses

Company says recent rezoning process highlights more effective uses of capital
Mentions lingering opposition despite pledge to create 5,000 jobs

The competitive landscape for casinos in New York City continues to evolve dramatically, with Wynn Resorts (NASDAQ: WYNN) recently announcing its exit from the race. This marks another significant shift in the ongoing battle for a limited number of casino licenses in the city.

Wynn New York City Hudson Yards Related Companies — Renderings of Hudson Yards West. Wynn Resorts announced it’s dropping out of the New York casino race. (Image: Related Companies)

Citing a lengthy rezoning process and unyielding local objections, Wynn expressed its decision to pull out of this high-stakes casino competition, originally aiming to create a casino hotel on Manhattan’s West Side. This initiative was expected to generate around 5,000 new job opportunities for the area.

The recent rezoning has shown us that there are better uses for our capital that would be more beneficial for our shareholders, such as investing in our existing developments and stock buy-backs, compared to entering a project that will undoubtedly face persistent opposition,” stated a spokesperson from Wynn Resorts.

Wynn was collaborating with the well-known real estate developer Related Companies on a substantial $12 billion development proposal for the Hudson Yards area. The casino operator expressed gratitude towards Related for their partnership and recognized the potential of the Hudson Yards West project for New York City.

Currently, Related has not commented on Wynn’s departure. However, it was previously indicated that a $12 billion development would be financially unfeasible without the gaming component.

Another One Bites the Dust in New York Casino Race

As of April, there were 11 contenders vying for three casino licenses in downstate New York. Now, the list has narrowed to eight competitors. On April 10, Saks Fifth Avenue kicked off this trend of withdrawals by announcing that it would cease pursuing a casino bid.

A fortnight later, Las Vegas Sands (NYSE: LVS) also pulled out, citing concerns over competition from iGaming. Sands is currently looking for a partner to manage its obligations at Nassau Coliseum in Uniondale and to pursue a New York gaming permit.

Wynn’s exit comes amid the costly and challenging nature of aiming for a downstate license, which carries a steep $1 million application fee. Additionally, winning bidders will need to pay $500 million each for their licenses, with some experts suggesting that due to the enormous population in the New York metro area, the state may soon increase the potential price tag to $1 billion.

This announcement arrives shortly after the company’s first-quarter earnings call, where CEO Craig Billings stated, “New York is a promising market, but it is also highly complex with various factors to consider.” He also mentioned the threat posed by iGaming, highlighting that while New York has yet to approve this form of wagering, they would be willing to submit a fair bid but wouldn’t overextend themselves to secure a license.

With Wynn Out, Bidding Odds for Remaining Participants Shorten

Initially, many believed that MGM Resorts International’s Empire City Casino in Yonkers and Genting’s Resorts World New York in Queens would secure two of the three available licenses. This assumption implied that the remaining contenders were competing for a single permit.

Although regulators have not made statements on this, it is widely acknowledged that these slots-only venues have proven to be lucrative for the state, bolstering the belief that they could easily secure licensing.

Moving forward, each withdrawal from the bidding process could enhance the prospects for those who remain. Wynn’s departure may improve the chances for other entities like Steve Cohen and Hard Rock International (Queens), alongside Caesars Entertainment and SL Green (Times Square), enhancing their odds of success in this competitive dynamic.

Another Win for Community Activism

Wynn’s decision aligns with growing community activism concerns. Groups such as “Protect the High Line” have actively opposed the Wynn proposal, arguing it would disrupt the aesthetics and appeal of the High Line Park, as well as the surrounding neighbourhood.

“We are pleased to see that Related has acknowledged community concerns and concluded that the original plan was untenable,” said Alan van Capelle, executive director of Friends of the High Line.

This decision resonates with community sentiment as more voices are raised against developments perceived as detrimental to local heritage and public spaces.

Key Takeaways

Wynn Resorts steps back from New York casino bid due to ongoing opposition.
The exit highlights investor focus on more rewarding allocations of company capital.
Remaining participants in the bidding process may see improved odds as competitors withdraw.
Active community engagement influenced this decision, showcasing increased local involvement.

Wynn’s withdrawal underscores the complexities of the competitive casino landscape in New York. As entities like Wynn, Saks Fifth Avenue, and Las Vegas Sands exit the fray, the remaining bidders may find their chances of obtaining a casino license significantly increased. Stakeholder interactions and community activism continue to play pivotal roles in shaping the future of urban casino development.