The dedication from Wynn New York Casino might surpass $6 billion.

Related Companies has recently revealed its plans for a $12 billion expansion of Hudson Yards on Manhattan’s West Side. Within that budget, the proposed casino hotel by Wynn Resorts (NASDAQ: WYNN) would account for $5.7 billion.

Assuming the operator secures one of the three downstate casino licenses yet to be awarded by New York regulators, the $12 billion price tag exceeds the previously estimated $10 billion for the Hudson Yards project. Privately held Related has indicated that it is unlikely to proceed with the project without obtaining a gaming license.

Although the total development cost for the Western Hudson Rail Yards complex may be as high as $12 billion, as recently reported, the development cost for the Wynn New York City gaming resort is approximately $5.7 billion, excluding licensing fees and financing costs,” according to a statement issued to Casino.org by Michael Weaver, chief communications and brand officer at Wynn.”

Although the casino would serve as the focal point of the Hudson Yards expansion, the development would also feature 1,500 apartments, a public school, a daycare center, and two million square feet of office space.

What Factors Could Lead to Wynn New York Casino Expenses Surpassing $6 Billion?

As Weaver pointed out, the estimated $5.7 billion expenditure for a Wynn casino in New York City does not encompass financing and licensing fees.

Concerning the licensing aspect, initial expectations were for New York to demand upfront payments of $500 million from successful bidders for licenses. However, given the state’s financial needs, there is speculation that these fees could rise to $1 billion per winning operator.

In essence, prior to factoring in financing expenses, Wynn could potentially face total costs of $6.7 billion in New York if it secures a casino permit. This represents a significant portion of the operator’s market capitalization, which stood at $10.98 billion at the close of US markets today.

In the gaming sector, there is a prevailing notion that due to New York City representing arguably the most promising untapped domestic casino market, the state holds the leverage to raise licensing fees.

The expenses related to financing might also be substantial.

Weaver’s statement didn’t address any intention by Wynn to utilize debt for construction in New York if it secures one of the three casino permits. However, if the operator decides to pursue this option, it could prove costly.

Despite growing optimism from credit ratings agencies regarding the gaming company, Wynn still holds non-investment-grade ratings. Coupled with the mounting speculation of prolonged higher interest rates, it’s evident that any non-investment-grade issuer would need to offer high coupon payments on newly issued bonds to attract investors.

By the conclusion of last year, Wynn possessed $2.88 billion in available cash and had access to $736.5 million through a revolving credit facility maintained by Wynn Resorts Finance.