Wynn Drops New York Casino Bid, Cites ‘Persistent Opposition’

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

The New York City casino competition is chewing up bidders and spitting them out with Wynn Resorts (NASDAQ: WYNN) becoming the latest to depart that fray.

Citing a cumbersome rezoning process and long-running objections to its plan for a casino hotel on Manhattan’s West Side that would have been a significant jobs creator, Wynn said it’s bowing out of the New York casino race.

The recent rezoning process has made it clear to us that there are uses for our capital more accretive to our shareholders, such as investment in our existing and upcoming developments and stock buy backs, than investing in an area in which we, or any casino operator, will face years of persistent opposition despite our willingness to employee 5,000 New Yorkers,” according to a statement issued by the Las Vegas-based gaming company.

Wynn was partnering with real estate developer Related Cos. on a $12 billion development of the Western Rail Yards. The casino operator thanked the developer, adding the pitch for Hudson Yards West “is an outstanding opportunity for New York City.”

As of this writing, Related hadn’t commented on Wynn’s decision to drop out of the New York City casino bidding process, but the real estate firm previously implied that a $12 billion development wouldn’t be economical without the gaming component.

Another One Bites the Dust in New York Casino Race

Entering April, 11 groups were positioning to compete for three downstate casino licenses, but in a matter of weeks, that number has been trimmed to eight. On April 10, Saks Fifth Avenue got that ominous ball rolling, announcing it would halt its longshot casino bid.

Wynn joined that group on Monday, perhaps underscoring the difficulty and costs associated with making a run at a downstate license. Each bidder will be subject to a $1 million application fee and the three winners will pay $500 million apiece for their licenses, but some experts believe that due to the population of the New York metro area, regulators there have the leverage to potentially lift that figure to $1 billion.

Wynn’s decision to pull out of New York arrives less than two weeks after the company’s first-quarter earnings conference call, on which CEO Craig Billings said “New York is a great potential market,” while acknowledging “it’s also a complicated market with a lot of considerations.”

Billings also acknowledged the iGaming threat, though New York hasn’t legalized that form of wagering, while pointing out Wynn would make a fair bid for a permit “but we absolutely will not get over our skis to win a license there.”

With Wynn Out, Some New York Casino Odds Shorten

When the New York City casino race started, it was widely believed that MGM Resorts International’s Empire City Casino in Yonkers and Genting’s Resorts World New York in Queens would win two of the three licenses, implying that the other contenders were vying for just one permit.

Regulators haven’t commented to that effect, but those slots-only venues have been money makers for the state and consensus indicates those properties could easily win two of the three licenses.

That implies that with every departure, remaining bidders could benefit. So with Wynn out of the picture, Steve Cohen and Hard Rock International (Queens), and Caesars Entertainment and SL Green (Times Square), among others, could see improved odds of success.

Another Win for Community Activism

As is the case with Sands on Long Island, a case can be made that Wynn’s decision to drop its New York casino plans is another victory for community activism.

“Protect the High Line”, which has long opposed the Related/Wynn proposal, was strident in its opposition to the gaming project, noting it threatened the High Line Park’s famed views and the character of the neighborhood. The group has been active in terms of leaning on local politicians to oppose the Related/Wynn pitch and has found success in rallying other groups to join it in that opposition.

“We are pleased to see that Related has listened to the community and realized that the original plan was not viable,” said Alan van Capelle, executive director of Friends of the High Line, in  a statement. “The latest plans appear to address many of our concerns related to the impacts on the High Line, enhanced public space, and a much needed increase in affordable housing.”