American global hospitality and entertainment company, MGM Resorts International (NYSE: MGM), announced Tuesday that together with its real-estate investment trust, MGM Growth Properties LLC (NYSE: MGP), it has agreed a deal that will see it purchase Empire City Casino in New York for $850 million. According to the official press release, MGM Resorts would pay a combination of cash and $260 million in stock and assume about $245 million of Empire City’s outstanding debt. An additional $50 million, which MGM also agreed to pay contingent upon Empire City’s receipt of approval to host live table games prior to the end of 2022, brings the total cost to $900 million.
The press release additionally states that MGM would sell the Yonkers property for $625 million to MGM Growth Properties and would lease it back for $50 million a year and a subsidiary of MGM Resorts would operate the property.
Chairman and CEO of MGM Resorts International, Jim Murren, communicated that they are excited to add Empire City to the company’s portfolio.
Murren explained, “This acquisition represents an excellent opportunity to further solidify our presence on the East Coast, and in particular, expand our reach into the high-density New York City region. We believe this transaction enhances our free cash flow profile and presents attractive future opportunities for the Company, and we look forward to welcoming the Empire City team and guests to the MGM Resorts family.”
The move by MGM appears to be somewhat driven by the May 14 Supreme Court decision overturning the Professional and Amateur Sports Protection Act (PASPA) and its desire to get in on what New York and many other states around the country are rushing to do: serve a potential sports betting market.
Including New York, about 18 other states have either recently passed or introduced sports betting bills.
Part of Yonkers Raceway, founded in 1899 as the Empire City Trotting Club and acquired in 1972 by the Rooney family, who are majority owners and operators of the NFL’s Pittsburgh Steelers, Empire City offers live and simulcast horse racing, more than 5,200 slots and video poker, along with electronic table games.
The Las Vegas Review-Journal reports that in a Tuesday note to clients, Telsey Advisory Group gaming analyst, Brian McGill, communicated that New York state legislators are working to get a bill passed prior to June 20 when the current legislative session adjourns. According to McGill, the bill is likely to make sports betting legal at off-track betting facilities, racetracks, mobile devices and state and Native American casinos.
Tuesday’s press release adds that in southern New York, approximately 16 million eligible gaming customers are served by Empire City.
The Review-Journal cites a 2017 Oxford Economics report (pdf) that explains that allowing for a tax rate of below 10% and access to land-based casinos and mobile, as much as $1.2 billion annually in sports betting could be generated by New York.