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Summary:
- S&P Global says a casino project in New York could add incremental leverage for the winning bidder
- Some of the companies likely to bid for a gaming license in New York also operate casinos in Asia and Macau
- Analysts say Macau GGR will continue to recover in 2024, exceeding 2019 levels
Securing a full-scale casino license in New York could result in additional leverage for some of the world’s largest casino operators, according to S&P Global Ratings.
In its latest report, the credit rating agency stated that building a casino in downstate New York will be a large-scale development project that could add “incremental leverage” for any successful bidder. Specifically mentioned in the report are companies that also run casino properties in Asia, including Macau.
Development Projects Will Have Leverage Effects for Operators
Outlining the key risks that major gaming operators could face in 2024 and the near future, S&P Global noted that development projects “could delay deleveraging or add incremental leverage” particularly for gaming companies that are expected to join the casino bidding process in New York.
According to analysts, Las Vegas Sands Corp., MGM Resorts International, Wynn Resorts Ltd., and Genting Bhd are likely to apply for one of up to three full-scale casino licenses on offer in New York. If any of them wins a license, the scale of the project would have some leveraging effects and could slow improvement in the operator’s credit measures.
S&P Global stated that any New York casino project would cost between $2 billion (for expansion or redevelopment of existing properties) and over $5 billion (for new developments). The leveraging impact won’t be immediate though, as New York is not expected to award the licenses before the second half of 2024. Successful bidders are also unlikely to initiate any material capital spending before 2025, analysts at S&P Global noted.
Some of the operators mentioned in the report have ongoing development projects in other parts of the world. For instance, Wynn Resorts is currently involved in a major casino development in Ras Al Khaimah in the United Arab Emirates, while MGM Resorts is also part of a consortium behind the development of an integrated resort with casino in Osaka, Japan.
Macau GGR Continues to Recover
Las Vegas Sands, Wynn, and MGM Resorts International are among the six casino concessionaires in Macau.
Under their new contracts, they must collectively commit MOP108.7 billion in non-gaming and overseas marketing investment. However, if Macau’s annual gross gaming revenue (GGR) crosses the MOP180 billion mark, each casino concessionaire is required to boost their non-gaming investment by up to 20%.
S&P Global stated that these high investment commitments are manageable as Macau’s GGR continues to recover. Analysts predict Macau’s GGR for 2024 to be 5%-15% higher than in 2019.
