Published September 10, 2012
MADRID – The decision by Las Vegas Sands to choose Madrid for a big "EuroVegas" casino project was welcomed by city officials, but potential obstacles include the company's decision to fund only 35 percent of the resort and to demand changes in local laws.
Ana Isabel Marino, Madrid's counselor for planning and environment, said the regional government received the news "with contained satisfaction, given that this is the first step."
Las Vegas Sands Chairman and CEO Sheldon Adelson on Saturday announced the decision to choose Madrid over Barcelona for the multi-billion dollar gambling resort project on Friday night.
With Spain in recession and considering a bailout, raising 65 percent of the cost could be difficult. And there is no guarantee officials would agree to change Spanish laws to let gamblers smoke inside the casinos and the new buildings to soar above the skyline.
Analyst Ramon Zarate said, "I see capitalization by banks as being very complicated."
Zarate of the EMASI think-tank said banks were currently de-leveraging construction projects, so Adelson would need to "pool foreign venture capital funds, but it's complicated."
The Las Vegas Sands statement left some wiggle-room by saying resolution of "current economic challenges" in Europe is still a major consideration.
Adelson's plans had left Madrid and Barcelona — Spain's two largest cities — vying against each other for the casino resort. One official even warned that regional squabbling some 20 years ago had led to EuroDisney being located in France, not Spain.
But Barcelona was not to be undone by Vegas.
On Friday, the capital of the debt-ridden region of Catalonia unveiled its own plans for a 4.8-billion euro ($6 billion) "Barcelona World" resort situated beside the existing Port Aventura theme park near the Mediterranean Sea.
Barcelona's plan would include a casino, six large tourist complexes with 20,000 hotel rooms, shopping centers, a theater and offices, all on land with no planning modifications required. But financing for the resort has not been signed yet.
Regional sustainability counselor Lluis Recoder said that project has an advantage over Madrid's in that it would be built on land that already has street lighting and roads, and be located in one of Spain's major tourist regions.
Adelson's announcement was not welcomed by Spain's opposition politicians who said gambling attracts crime and that jobs such as hotel attendants, waiters and blackjack dealers are low paying and a threadbare option for Spain's many young unemployed citizens.
One opposition group, EuroVegas No Platform, said it plans a rally in Madrid's central Puerta del Sol square on Saturday.
Gaming investors have sniffed out Spain before. Harrah's Entertainment Inc. — now known as Caesars — explored the idea of building a Las Vegas-style casino-hotel near the picturesque medieval city of Ciudad Real, 190 kilometers (120 miles) south of Madrid in 2005.
Although an airport was built there and the site was reachable in less than an hour by high-speed train from Madrid, nothing came of the plan.
Through its majority-owned subsidiary Sands China Ltd., Las Vegas Sands also owns the Venetian Macao and Sands Macao casino resorts, the Plaza Macao hotel, restaurant and shopping complex, and the Sands Cotai Central resort with three hotels and two casinos.
The company's entry into the casino market in the former Portuguese colony near Hong Kong spawned legal battles in Macau and Las Vegas.
A Hong Kong businessman won a $43.8 million verdict in a civil lawsuit filed in Nevada in 2004 claiming he was denied a $5 million "success fee" and 2 percent of net casino profits for helping the company win its Macau gambling license. The Nevada Supreme Court in 2010 ordered a retrial. That case is pending.
A bruising lawsuit filed in 2010 by Sands Macau's former top executive, Steven Jacobs, has drawn interest in the company from U.S. Justice Department and Securities and Exchange Commission investigators for possible violation of the Foreign Corrupt Practices Act.
The law bars U.S. companies from paying foreign officials to "affect or influence any act or decision" for commercial benefit.
Adelson and the company deny wrongdoing and are vigorously defending the case. No charges have been filed.