Genting's $1 Billion Tax Promise Aims to Secure NYC Casino License Amid Hefty Competition

📝 SUMMARY: Genting Malaysia Bhd ($GENM), which already operates Resorts World casino near the Aqueduct racetrack in Queens, New York, has pledged to significantly increase its tax contributions to the state in hopes of winning a new casino license. In a bold move designed to strengthen its bid, the company stated it would raise its tax payments to more than $1 billion annually if granted the license, up from over $600 million paid last year.

The company's commitment includes maintaining a 67% tax rate on its slot machine revenues, which encompasses administrative fees and other expenses, while promising a slightly lower rate for table games like blackjack. However, combined, these contributions would surpass the $1 billion threshold annually. This tax arrangement is part of Genting's proposal to expand its current gambling operations to include additional table games and other amenities, leveraging its existing infrastructure next to the Aqueduct racetrack.

The licensing process, overseen by New York’s Gaming Commission, has encountered potential delays with environmental and other local approvals, possibly pushing the decision into late 2025. Despite expectations for a decision this year, the lengthy timeline has prompted speculation that legislative intervention could expedite the process.

Genting faces formidable competition for one of the coveted spots. Notable contenders include Las Vegas Sands Corp. ($LVS), Wynn Resorts Ltd. ($WYNN), and financier Steve Cohen in partnership with Hard Rock International. Each candidate is expected to compete fiercely, particularly through financial commitments such as the mandatory one-time $500 million fee to the state and ongoing tax payments.

New York's casino market is among the most heavily taxed in the United States, with a standard 55% tax rate on electronic gaming devices, starkly contrasting with Nevada’s 6.8% rate. This high tax burden reflects the competitive and lucrative nature of New York’s casino industry, attracting major players ready to invest heavily in exchange for a slice of the market.

Genting’s strategic pledge to increase tax payments significantly highlights its aggressive approach to secure a license, setting a high bar for its competitors and signaling its commitment to long-term investment in New York’s gambling sector.

🔍 SOURCE: https://www.bloomberg.com/news/articles/2024-04-07/genting-pledges-1-billion-in-taxes-to-win-n-y-casino-license?srnd=industries-consumer