Muhammad Cohen, a former New York City city planner, writes that casinos can dramatically improve the urban landscape, but this won’t be happening in New York City.
New York City is in a race to get casino licenses. The downstate casino gambling area has the potential to have a seismic effect on the commercial side.
As a journalist covering the Asian gambling industry, I have seen first-hand the transformational power of the urban casino. Macau had been on a losing spree since the middle 1600s before casino liberalisation. In the late 1990s, Macau was plagued by economic stagnation and high unemployment. Gangland shootings were also common.
Six licensees invested over $40bn into Macau’s casino resorts in the last 20 years. These include luxurious hotels, theatres and arenas as well as shopping, conventions and other amenities. The licensing process that just ended promises an additional $14bn for the next decade.
Benefits of Casino Expansion
Macau’s revenue from casinos was $36.6bn, five times more than the Vegas Strip. The gaming tax revenues created $72bn in government reserves, which is more than $120,000 per Macau resident.
Macau was almost at full employment before the pandemic and on course to surpass Qatar as the country with the highest per capita GDP in the world.
In 1995, Cambodian tourism was still considered a joke by punk-rockers when NagaCorp launched its Phnom Penh Casino on a barge moored at a Mekong River branch.
Naga came onshore in Hong Kong, and after raising capital, became the first casino to be listed on the Hong Kong Stock Exchange. They built NagaWorld which now has 1,700 rooms, a Broadway-style theatre, and an underground shopping center that spans the boulevard between the original Naga branch and Naga2 branch.
Naga is working closely with the Cambodian Government and Chinese State-owned Companies to promote tourism. They are supporting the launch a Cambodian International Airline connecting Phnom Penh with Siem Reap and second-tier Chinese Cities, the site of Angkor Wat.
According to World Bank figures, tourism expenditures increased from $71m in 1995 to $5.31bn in 2019. This sector accounted for 12 percent of Cambodia’s GDP before the pandemic.
Singapore raises stakes
Singapore legalised casino gambling in 2005 in order to bring “the X factor – the buzz you feel in London, Paris, or New York”, said Lee Hsien Loong, aiming at proving that Singapore was no longer your father’s Singapore. Lee Kwan Yew is Lee’s father, so it was not really his father.
Singapore’s casino industry enthusiastically adopted the term “integrated Resort” to describe its multifaceted entertainment facility.
Marina Bay Sands is the new symbol of Singapore. Its three 55-storey towers are connected by the SkyPark of three acres, which is 200 meters above the Singapore River. The SkyPark features the infinity 140-metre pool featured in Crazy Rich Asians.
Singapore has seen both its visitor numbers and spending double since opening the resort in 2010, reaching 19,1 million and $20bn respectively by 2019. Marina Bay Sands has consistently been the most profitable casino on Earth.
Backlash against casino plans
Initial public reaction to Singapore’s legalization of casinos was the most severe ever. A greenfield casino is likely to receive a similar response in New York City.
After living in Marina Bay Sands’ shadow for 12 years, Singaporeans are now embracing it as a calling card for the country that is known for much more than just its ban on chewing-gum. MBS, located in an appendix to the downtown area that was once remote, has now become an integral part of Singapore’s urban fabric. It is a global object of envy.
New York City can match Singapore’s success in the casino industry. According to a study by consultant Spectrum Gaming, a Manhattan-based integrated resort would generate gaming revenues of up to $2.35 billion.
This could create 21,500 permanent construction jobs and $1.2bn of tax revenue, plus 3361 years worth of construction work.
These are impressive numbers for Macau or Cambodia. New York City will not be affected by these numbers. Macau’s 600,000 inhabitants are less than a tenth of the population in New York City. Cambodia’s economy was primitive in 1995, and even now, when comparing the GDP of New York City to that purchased power parity, it is only 5%. Singapore is one of the world’s richest countries per capita but it has a GDP that is only a quarter as large as New York City.
New York Casino Growth Limited
Even after accounting for the expected $500m one-time licensing fee per casino, this potential windfall barely registers in New York State’s annual $220 billion budget.
The projected gaming taxes in downstate are less than 2%.
Marina Bay Sands is not a popular destination for the economic benefits it brings. Instead, visitors love its slender towers, its lotus museum, and its sun-drenched shopping center, which has enough high-end brands to blush Fifth Avenue.
New York City will never get a casino that is as spectacular. Sands Wynn Caesars Mohegan Gaming Hard Rock and Hard Rock are among the gambling giants that may be interested in a Downstate license, but only one could fit. The money they’d invest would be a small fraction of what it cost to build Marina Bay Sands.
MGM Resorts International, and Genting Malaysia are the front-runners in the race for casino licenses downstate. MGM Resorts has slot machines at Yonkers Racetrack while Genting Malaysia runs slots at Aqueduct.
They have both lobbied hard and long to include table games. In those racinos the casino won over $1.5bn in last year.
Operators are not responsible for this staggering figure. It is largely due to the 23,000,000 people who live in New York City. It’s hard to believe that either casino is saving a more powerful gear for table games.
MGM Resorts has a chequered record of development
MGM has a spotty record of resort construction, despite its well-known name. CityCenter, recently rebranded Aria in Las Vegas cost almost $10bn, and it hasn’t had an impact that is commensurate to this investment.
MGM’s Macau exterior was ridiculed for being mediocre and its main entrance located far from the busy pedestrian downtown. MGM reproduced this design in Macau’s Cotai Casino hub a decade later and placed another entrance that was questionable. This is a company which knows how to make the same mistakes over and again.
Genting Malaysia belongs to the Genting Group which also owns Resorts World Sentosa in Singapore, another integrated resort.
Genting’s consolation Prize
A consultant who requested anonymity said that “Genting finishes first only in markets where they have a monopoly,” such as its home country, Malaysia and up until recently, New York City.
Genting attempted to introduce crony capitalism of the Asian style to Queens through a backroom agreement with Andrew Cuomo, then governor. The deal was to build a convention center at Aqueduct as a trade for a casino license. The plan was thwarted by widespread opposition.
Genting’s consolation, Resorts World Catskills tops the New York private casino revenue chart. It has, however, fallen far short of its projected revenue since it opened in 2018.
In the face of mounting losses, Genting Chairman Lim Kok Thay (the founder’s child) orchestrated the buyout by Genting Malaysia’s public listed shareholders of the private stake held in his family.
A bowling alley with elegance and panache
Slot parlors in the downstate area exude elegance and charm of bowling alleys.
Their locations on major thoroughfares, in densely populated areas ensure that they prosper as full service casinos. They also disadvantage new competitors from downstate. The presence of gamblers on the radar for management via loyalty programs also helps.
Driving distance competition
New York City casinos will face stiff competition from other casinos located within a short driving distance. The massive Native American Mohegan and Foxwoods casinos in Connecticut, and Atlantic City’s casino cluster are all within driving distance.
Other gaming companies would be more interested in the third licence downstate under these market conditions and a licensing fee of $500m, but perhaps not at a cost of $6bn. The vague plans of declared bidders do not reveal their budgets.
Caesars has proposed to locate a Times Square Casino in SL Green’s existing 1515 Broadway Office Tower. So much for the estimated 3,361 years of construction work.
Las Vegas Sands (developer of Marina Bay Sands) is so confident that they can replicate that magic in New York City, that it has proposed a casino on the Nassau Coliseum site, located 45km from Central Park, at Long Island. LVS’s proposal includes “outdoor communal spaces”, perfect for bake sales and flea markets.
The proposals so far barely mention any iconic features. On the Far East Side of Manhattan, Soloviev Group suggests adding New York City to the long list cities that have a ferris wheel in the downtown. Or wow-factors, because they won’t exist. They are not needed.
New York Casino Plans on Hiding to Nothing?
Lee Hsiang Loong was in love with New York City. The Minskoff Theatre at 1515 Broadway is one of the many Broadway-style theaters in New York City. It also has unmatched food, shopping and entertainment.
The limited budget of a third casino in downstate New York will not allow you to top that. State could only offer one licence for a downstate casino in order to encourage a resort casino worthy of New York City rather than 3 uninspired money boxes.
Spectrum’s Report estimates that three casino licenses would marginally maximize fiscal benefits for both the state and city; however, three licences are certain to maximise profits for politicians and their accomplices.
New York City, home to Broadway, Empire State Building and Katz’s Deli as well as the Mets, Yankees, Mets, Mets Stadium, Lady Liberty and the Mets needs casino gaming like a fish requires a bike.
The odds are stacked against the city of hitting it big with an integrated resort. It is best to stay away from the game and follow the wise money.
Muhammad Cohen, a former US diplomat who is currently the editor-at-large of iGaming Business Asia, has been covering the Asian casino industry since 2006. He most recently covered it for Forbes. In 1997, he wrote a novel called Hong Kong On Air about television news, romance, betrayal and high finance.
