As one old adage goes, “If you can’t stand the heat, get out of the kitchen.” Another cautions that adding fuel to the fire only increases the heat. None we are aware of speak to what happens when you add your own fuel by stating your case and promoting your own interests or having others do that for you.

Hell’s Kitchen is a part of New York City with a storied past quite unlike that of Times Square, a little more than a mile away. Centre Street, the Bowery, Canal Street, and Park Row – the general location of Martin Scorcese’s and Leonardo Di Caprio’s epic historical fiction story, the Gangs of New York is only about three miles away.

Setting the Stage for an Epic Battle

That backdrop should set the stage for what could be about to commence in the competition for three new downstate casino licenses in New York state – the first actual bonafide real Las Vegas casino licenses ever issued in or around a bustling metropolis holding some 19 million potential casino customers. A market that some have deemed to be potentially be the most lucrative latent casino market in the world.

Although there are three casino licenses available in downstate New York, potentially in and around New York City, most reporting indicates that two of those licenses are “widely believed” to be destined for the existing lottery-based casinos in Yonkers and Jamaica, Queens. The existing casinos are relatively large gaming venues that already provide tens of millions of dollars if not hundreds of millions in annual tax revenues, jobs benefits, and other financial knock-ons to local communities and the state in general. They are also operated by Resorts World and MGM, two of the largest casino operators in the world.

If two of the licenses are as good as thrown to the wind by simply changing the way two large casinos account for their handle, churn, and hold more to “real casino” standards rather than the simpler video lottery terminal and more or less fixed odds electronic gaming table accounting practices with wilder swings in gross gaming revenue for the more volatile games or natural swings in deviations from the mean for “coin flip” games like real baccarat, roulette or even baccarat, what is to be gained by the state?

That seems to be the elephant-in-the-room question most reporting fails to ask. We proffer that all three licenses might actually be up for grabs because “damn the torpedoes”. New York state will choose whichever options actually generate the most revenue and benefits for the people of New York, the local communities, and the state, because “that’s actually the remit” isn’t it?

The state is not in the business of doing favors for competitive businesses or at least it shouldn’t be, and if existing “casino communities” and their attendant gaming operators lose a little for the greater good of the state by creating three brand new revenue streams “cannibalism be damned” then that’s exactly what the location selection committee will recommend – or should.

If, in the end, a greater benefit for the whole of the state and the populace can be shown to be better attained by simply expanding the current gaming venues – more or less grandfathering in existing operators without fear or favor, then that is what the selection will, or should determine its job is to do.

Back to the Heat in the Kitchen

If that is the case, and the world’s most powerful casino interests are about to embark on a competition for perhaps the most lucrative market on earth – observers and participants should be ready for an epic battle of the titans as has never been seen before and it’s going to get so hot in downstate New York that an outside observer wouldn’t know the difference between Hell’s Kitchen, Times Square, Staten Island, Coney Island, any of the potential sites for a single new casino license. Or hell itself.

We saw amazing machinations for placement, power and control of the upstate casino markets a few short years ago when the first Las Vegas-style casino towns and operators were chosen – so-called “grassroots organizations”, false-flag petition drives, disinformation, seriously flawed “gaming studies”, political upheavals and almost every other imaginable disruption of industry-standard business decorum and charm offensive imaginable.

You ain’t seen nothing yet

For now, we see self-promotion, goodwill advocacy, and some local resistance to each announced contender’s proposal. We see good corporate “citizens” pitching themselves as the most viable alternative and none of the half dozen or so serious contenders has attacked any other in public – nor are they likely to overtly. Nothing “dirty” has bubbled up yet and none of those vying for a new license outside of Yonkers or Queens has alluded to there only being one license available – nor have the two “widely believed” “shoe-ins”.

MGM Resorts International, the owners of Empire City Casino at Yonkers Raceway in Yonkers has remained mostly mum on the subject as has Genting Malaysia Berhad – the ultimate owner of Resorts World New York at Aqueduct Raceway. And that is the wise move. Isn’t it? That could change.

What’s Coming?

When the state opened bidding for the licenses they set the minimum bid at half a billion dollars and let it be known that it would be a competitive bidding process. At least one player stated it would not go down that route – it would offer a proposal, and negotiate in good faith, but not go head over heels into a bidding process. There are, of course, many possible reasons for such a position not the least of which could be that it would show weakness if it were to find itself unable to compete in a high-priced auction of sorts or that it might not have quite the resiliency to be an effective world power if it tied up resources in an unproven market due to the “known unknowns” of just how many licenses might be up for grabs in reality.

Perhaps New York state or the existing video lottery terminal and electronic table game providers should clear the air and let the public, as well as the potential contenders, know specifically if the existing lottery casinos are on equal footing with other competitors or if they are to enjoy a potentially unfair advantage. Each new proposal we have examined has addressed community benefits and other aspects expected of them in the request for proposals. There is still an elephant in the room and that elephant, if not stared down and asked to dance could quite possibly, become exhibit #1 in any “sour grapes” lawsuits, which inevitably arise before all is said and done when the stakes are this high.

For now, the question remains, just how hot is this contest going to get? The answer is most likely just hot enough to create inflection point after inflection point and just hot enough to bend reality in the mirror of time enough that when it is all said and done, most people will be glad just to be shut of it and to get on with life in the fast lane of gambling. However, it also could present myriad risks to consumer confidence in any and all processes involved in American casino license tenders.

Were two additional licenses approved by voters with a simple majority of Yay vs Nay votes after all seven currently authorized licenses have been issued under the 2013 referendum – all stakeholders, including the public, deserve the quietude of a clear and transparent process with no wild animals lurking in, stumbling. Around, or crashing through the room

If that is true, then why not now? If not now, when? The tender candidates who may risk many times the “minimum bid” to build the casino(s), as well as the public surely deserve to know.

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