Strapped developers eye New York City as next big target for gambling

New York

WITH New York state desperately looking for new sources of revenue, real estate developers and gambling interests are trying to revive interest in a long-shelved proposal: a casino in New York City.

The concept is hardly new. Casino operators have been seeking to capitalise on the New York City market for decades, focusing on the dense, typically tourist-rich sections of Manhattan, which they consider the holy grail of gambling in the United States.

State lawmakers and Governor Andrew Cuomo have traditionally opposed efforts by gambling companies to bring a casino to New York City.

But this latest push could carry more weight because of its timing - Mr Cuomo says the state is facing a US$15 billion shortfall - and its supporters, which include real estate giants that have a track record of influence in Albany.

Vornado Realty Trust has pitched the idea of a casino on its expansive holdings near Herald Square, according to sources.

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Vornado's neighbour, Morris Bailey, the owner of Resorts Casino Hotel in Atlantic City, New Jersey, has talked with colleagues about building a casino on the site of his own Herald Square property, the former McAlpin Hotel, one of those people said.

L&L Holding Co has proposed making a casino the centrepiece of a US$2.5 billion tower it is building at 47th Street and Broadway, a 46-story development that encompasses a landmark theatre and includes a 669-room hotel.

The casino proposals highlight the tribulations within the commercial real estate market, where there is significant concern about the future of office buildings now that employees have acclimated to working from home.

Tenants leased just 20.5 million square feet of Manhattan office space in 2020, a 64 per cent decline over the prior year and "the lowest level experienced in at least two decades", according to a recent report by the real estate services firm Savills.

The state is authorised to issue three new casino licences beginning in 2023, but even before the pandemic hit last year, pressure was building to accelerate the timetable, particularly in the New York City area.

If a plan for the legalisation of full-scale casinos in the city emerges, developers say they are ready with their pitches. "Times Square market is ripe for a high-end casino," reads a slide in a Nov 10 promotional deck for the L&L project in Times Square, which features renderings of attractive young people playing table games like roulette and blackjack, and an image of Celine Dion singing to a packed crowd. "Be the future," it says.

The state's upcoming budget negotiations, scheduled to begin in earnest later this month, could well be when new or expanded gaming comes into focus. Mr Cuomo's budget proposal, released on Tuesday, would allow the state to put out a formal request for information from developers and gaming companies to gauge market interest in the three remaining licences. The state intends to ask potential bidders about the appropriate size and scope of development, and the value of the licence.

With the state's fiscal problems, leaders in New York have been casting about for new revenue streams, recognising that any aid from Washington - even with President Joe Biden now in office - may not be enough to fill the state's fiscal hole.

Lawmakers and casino executives say that each new licence would be a windfall for the state, with a likely asking price of at least US$500 million apiece.

"That's real money, in light of a US$15 billion deficit we're looking at," said Assemblyman Gary Pretlow, Democrat-Westchester County, who is chair of the chamber's committee of racing and wagering.

He added: "If I can raise a billion dollars without raising a penny in taxes, I think that's a good deal."

Mr Pretlow's counterpart in the state Senate, Joseph Addabbo, chair of the Racing, Gaming and Wagering Committee, also supports the plan to expand, saying such revenue could be used to stave off a variety of painful cuts to education and healthcare. He said that new casinos can create much-needed jobs in construction and in the gaming facilities.

In an interview last week, Mr Addabbo added that such a licence would be "gold" to casino developers, who view the New York City area as one of the last unsaturated gaming markets in the Northeast and have floated the ideas of casinos in Coney Island, Queens and Manhattan.

The reception in Albany, however, has traditionally been unenthusiastic. "I'm not a big fan of casinos, period," said Liz Krueger, a state senator from Manhattan and the powerful chairwoman of the Senate Finance Committee. And Brad Hoylman, the state senator whose district includes Times Square, said it "would be a fight to get me and a lot of other people to support a casino".

Even Mr Pretlow believes there is not enough political support for a Midtown casino, saying: "Manhattan is off the map."

Still, some lawmakers and gambling interests hope that the state's fiscal situation might make Albany more receptive. Indeed, Mr Cuomo said recently that he now supports legalising mobile sports wagering in the state, a move that he hoped could bring the state an extra US$500 million a year when fully in place.

The Real Estate Board of New York, which represents nearly every major developer in New York City, has expressed support for the acceleration of the downstate licences - for the sake of its membership and the state's fiscal health. NYTIMES