The competition for casino licenses in New York City is heating up, and potential operators are facing not only the high stakes of winning the licenses but also significant financial risks. According to a recent report from S&P Global Ratings, successful bidders may find themselves burdened with substantial debt as they seek to establish themselves in the highly competitive market.

The New York state government is preparing to award three downstate casino licenses, a move that opens up one of the last untapped gaming frontiers in the United States. Major players such as MGM Resorts International, Las Vegas Sands, and Wynn Resorts are all vying for the opportunity to secure a foothold in the lucrative New York market.

S&P Global Ratings outlined the potential financial implications for winning operators in a comprehensive report. The proposed projects range from $2 billion for expansions or redevelopments of existing properties to over $5 billion for entirely new developments. The report suggests that the impact of the associated leverage could materialize within the next 12-18 months, posing a challenge to corporate credit metrics.

Rumors have also been swirling about the potential record-breaking $1 billion licensing fees that winning bidders may be required to pay. This figure far exceeds the initially anticipated cost of $500 million per permit. When factoring in construction costs, operators like Las Vegas Sands and Hard Rock International could be looking at staggering total investments of up to $6 billion and $8 billion, respectively.

Despite the significant financial challenges, experts believe that New York could offer a short-term pain, long-term gain scenario for victorious operators. The prospect of dominating the New York market is seen as a strategic move that could pay off handsomely in the long run. However, the timeline for these developments is extended, with S&P suggesting that licenses may not be awarded before the second half of 2024, and significant capital spending is not expected until 2025.

Overall, the race for New York City casino permits is not only a competition for licenses but also a high-stakes gamble in terms of financial risk, with potential operators facing substantial debt burdens and record-breaking licensing fees as they vie for a foothold in the lucrative New York market.

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