Ante Up: Developers Must Pony Up $1M to Play Casino Game

Five real estate titans are bidding for a Manhattan casino license and with only three up for grabs in the entire metro area, there’s no guarantee the borough will get even one.

| 06 Jan 2023 | 01:31

Only high rollers can play in this Casino game. That was the basic message as New York State set up the process to apply for one of three licenses to run a casino in or around the Great City.

Any doubt that these licenses will be incredibly valuable was dispelled in the 67-page Request for Applications. First, the fee to apply starts at $1 million. The money will go to pay for an investigation of the applicant and an extensive review of the proposal. If all that costs more than a cool million, the state will bill you for the balance. You have 30 days to pay.

But that’s just the first call on the deep pockets needed to enter this high stakes game. Your application fee, earns you the right, as the state notes, to compete for a license. That competition requires elaborate plans and presentations. You’re plan also has to win local government and community approval (a special community advisory board will be set up for each application) before the state will even consider it.

In other words, you pay your money and take your chances. If you win, you could make billions. If you come up snake eyes, you are not just out of luck, you are out of whatever you put down. The house, er, the state, always wins.

The only sure bet laid out in the request for applications is that there are likely to be several competing proposals all working their way through zoning, land use and community approval processes with no guarantee that even if they succeed in all that they will win one of the coveted Casino licenses.

Look at just the Manhattan situation. At least five potential applicants have floated plans for a casino in Manhattan: in Times Square, Hudson Yards, a derelict former con ed site just below the United Nations on First Avenue, Herald Square/Penn Station and on the East River near 30th street. But the legislature has allocated only three licenses for all of the metropolitan area.

There are already two odds-on favorites for those licenses at the electronic gaming sites currently operating at Yonkers Raceway in southern Westchester, Aqueduct Raceway in South Ozone Park/Jamaica area in Queens. In addition, Coney Island is preparing a submission to turn the traditional summer playground into a year round entertainment venue and Steve Cohen the new owner of the Mets says he’d like a casino near Citi Field, where a development plan was just announced that includes housing and a new soccer stadium

So it is no sure bet that there will be any casino licenses for Manhattan.

“We expect it to be a very competitive process,” said Steve Roth, The CEO of Vornado Realty Trust, who told an earnings call he was “very interested” in converting one of Vornado’s properties in Herald Square or around Penn Station into a Casino.

One major challenge for all the proposals, not unique to but perhaps magnified in Manhattan, is that the process announced by the state puts a heavy emphasis on community approval.

Community Board six has already formally opposed one plan floated, so to speak, last year by the WaterClub, at the foot of east 30th street.

“The high rollers that the Water Club is targeting will not benefit the retail or commercial establishments in the area,” The board said in a resolution.

Since another crucial test set by the state is how much revenue a new Casino will generate, the WaterClub’s application, if they make it, will probably pale, in any case, to the huge scale of other plans, like the Caesars Palace proposed for the SLGreen owned building at 1515 Broadway, in the heart of Times Square.

Caesars Palace Times Square, as it is calling itself, has rolled out a massive marketing effort to mobilize support, including strategic opeds and automated phone calls to Manhattan residents over the last few days.

Even before it is formally submitted, the proposal has driven a wedge through the Times Square community. Actors Equity and Carmines Resteraunt, for example, endorsed the proposal.

“We applaud the developer’s commitment to make the neighborhood safer for arts workers and audience members alike,” said Actors Equity, the union representing performers.

But the Broadway League and the owner of Sardi’s oppose it. “Broadway is the key driver of tourism and risking its stability would be detrimental to the city,” said the Broadway League, which represents producers and theatre operators.

The resistance of theatre owners hardened last month when Jay-Z’s entertainment agency, Roc Nation, which represents performers, announced they were partnering to support the Casino, which will include a large entertainment space.

It is not clear how the state will respond to this kind of divided opinion. The approval process creates a formal panel for each application to assess community support. These Community Advisory Boards will be composed of members appointed by the Governor, Mayor, Borough President and local legislators.

Each proposal will also be going through the city’s land use process, which includes local Community Boards. And as Community Board six demonstrated, these boards are unlikely to just sit back and await while others decide.

Board six has another plan in its backyard. Stefan Soloviev, the realtor and entreprenuer, has floated a plan for a site that family run real estate empire has owned for 15 years just south of The United Nation’s between First Avenue and the River. In addition to a Casino and hotel, the project would include a huge Ferris Wheel and what the plan calls a Museum of Democracy.

Perhaps the process of handing out Casino licenses can be a musuem exhibit? The developer says the 6.5 acre plot is “shovel ready” and is the largest undeveloped real estate in Manhattan today although that would not include the yet-to-be-created land above the Hudson River rail yards where Related Companies proposes to put its Casino in conjunction with Wynn Resorts.

Plans to build a 4,000 unit apartment complex on the Soloviev-owned East side site adjacent to the FDR Drive came to a halt when the Great Recession hit in 2008.

If Soloviev has a winning hand, it would mark the first ferris wheel in Manhattan since Toys R Us collapsed and closed its Times Square flagship in 2018. But there are no guarantees for anyone.

Indeed, the process is so elaborate that the state agency in charge, known as the Gaming Facility Location Board, more or less shrugged in its formal documents on the question of how long this will take.

It gave potential applicants 30 days from January 3 to ask questions. But it could not say how long it will take the board to answer those questions. Then the potential applicants will get a second round of questions, which the board again could not say when it will answer.

So sixty days from now plus however long the board takes to answer the two rounds of questions will be the crucial date when potential applicants will have to decide whether to put their million dollars down and actually enter the competition.

After that will come the community review, city zoning and land use review and investigation of the applicants and their proposals.

“It is impossible,” the board said in its Request for Applications, “to establish realistic timeframes relating to the completion of these processes.”

“We expect it to be a very competitive process,.” Steve Roth, CEO of Vornado Realty Trust