A Stunning Reversal for Planned Yonkers Casino
Yonkers City Officials were in shock yesterday when MGM unexpectedly announced it was withdrawing its NY State application for a full gaming license at its Yonkers racino. This is understandable: the City stands to lose a purported $52 million in annual revenue from the casino, as well as millions of dollars under the Community Benefits Agreement (CBA) that the city had negotiated with MGM.
In explaining its decision, MGM stated that since all remaining applicants are very near to each other, there would be too much competition, cutting into profitability.They also claimed that the State’s decision to award a license of only 15 years, instead of their requested 30 years, didn’t align with their investment objectives..
It was only last month that City officials and MGM executives celebrated Yonkers community approval of the application. There was a sense that the award of the license to MGM was inevitable.
According to Mayor Mike Spano, MGM’s reversal betrayed the people of Yonkers and Westchester County, and their rationale just doesn’t add up. He called on Governor Hochul to investigate a possibly corrupt deal between MGM and the Trump organization. If Bally’s wins a license for its competing proposal in Queens, at a former Trump golf course, Trump will be due a $115 million payment.
Earlier today, Governor Hochul announced that she was not aware of any reason to investigate. Clearly, even if she believes the Mayor might have a point, she didn’t want to appear to be taking sides during the application process because all of the remaining proposals, if approved, will benefit the entire State.
The impact of MGM’s decision changes the political landscape in our City. Here are a few observations on what the decision may portend:
Social Media Responses
The MGM announcement triggered a significant response on social media. Some posters were disappointed and concerned about the economic shortfall that the City may suffer and the loss of jobs the casino would have provided. Many others, however, were delighted that the project is now dead. Those against the casino were concerned about the congestion and the social ills that gambling brings. Indeed, people just have to take a look at Atlantic City to see that casinos are not a panacea for cities.
Also, a sizable number of commenters suggested that the whole process may have been corrupt, insinuating that MGM could have backed out because of outside, undue pressure. They also disparaged politicians for demanding their “cut.” Said one wag: “This is just the big gangsters telling the little gangsters what to do.”
City Budget Implications
The loss of anticipated casino revenue puts pressure on the City’s current and future budgets. For example, with respect to the current budget, the City may already be on the hook for a contract to purchase the former Lincoln Park Jewish Center, for a new library, because now the City won’t receive the $10 million dollars from the CBA which was earmarked, in part, to pay for it.
In addition, the City may have to look to greater budgetary support from the State to fill revenue shortfalls from the casino. This may be too heavy a lift for our State representatives to deliver.
Will the Racino Survive?
There is a real concern over the continued viability of the existing racino. If gamblers have the choice of visiting new, exciting casinos, which are close by, MGM Yonkers will surely lose a significant portion of its patrons. Also, MGM may be unwilling to make future investments in what it considers to be a faltering Yonkers property. This may hasten its decline and ultimate closure. MGM is a huge international gambling enterprise, and it could easily decide to write off its relatively small Yonkers investment and move on.
The Mayor and City’s Reputation May Take a Hit
Mayor Spano’s reputation as the savvy builder of the new Yonkers – “Hollywood on the Hudson” and a first class entertainment center, is now in question. To survive the potential loss of the existing racino and the revenue it brings to the City, Spano will need to demonstrate his ability to fill financial gaps and provide a vision for a future without gambling. The cost of City government has grown significantly during the 13 years that the Mayor has been in office, and now for the first time he may have to make significant cuts. It could get ugly.
These are some preliminary concerns. It’s far from clear what the ultimate impact on the City will be. We at the Ledger will be watching these developments closely.
