Las Vegas Sands Cashes Out Of Sin City, To Focus On Other Markets

Deal includes The Venetian and the connected Palazzo, as well as the Sands Expo Center
Venetian Las Vegas
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The largest casino developer in the world based on revenue is out of Las Vegas.

On Wednesday, Las Vegas Sands announced that it will sell its properties and operations in Glitter Gulch to Apollo Global Management Group for about $6.25 billion. The sale follows rumors that began circulating in recent weeks and months about such a move. Earlier this year, Las Vegas Sands founder Sheldon Adelson, one of the richest men in the world, passed away after a long battle with cancer.

Under the terms of the agreement, an affiliate of funds managed by affiliates of Apollo will acquire subsidiaries that hold the operating assets and liabilities of the Las Vegas business for about $1.05 billion in cash and $1.2 billion in seller financing, according to a presser. VICI Properties Inc. will acquire subsidiaries that hold the real estate and real estate-related assets of The Venetian for $4 billion in cash.

The massive deal will, of course, require regulatory approval.

The timing of the transaction

The transaction comes as Sands looks to other markets, notably online gambling in the U.S. The firm recently went all in on lobbying for casino authorization in the virtually untapped Texas market, which has long served as a feeder market to Las Vegas and other neighboring states.

“This company is focused on growth, and we see meaningful opportunities on a variety of fronts,” Las Vegas Sands Chairman and Chief Executive Officer Robert Goldstein said in a statement. “Asia remains the backbone of this company and our developments in Macao and Singapore are the center of our attention. We will always look for ways to reinvest in our properties and those communities. There are also potential development opportunities domestically, where we believe significant capital investment will provide a substantial benefit to those jurisdictions while also producing very strong returns for the company.”

Patrick Dumont, the company’s president and chief operating officer, commented on the potential opportunities from online wagering: “[A]s our industry continues to evolve, particularly as it relates to the digital marketplace, we are committed to exploring those possibilities.”

Dumont also hinted at potential casino development in Texas by stating that Sands has an “established track record of success in developing and operating large-scale integrated resorts.” It’s also been rumored that Sands could look to establish itself in the state of New York, which to date has only authorized retail sports betting in the post-PASPA era.

“The company’s financial strength, which grows stronger as a result of this deal, gives us the flexibility to pursue a multitude of new development opportunities,” he added.

For years Sands sat on the sidelines as regulated online gambling spread throughout the U.S., but times have changed for the firm. Sands has long offered online/mobile sports betting in Nevada, so it’s never been opposed to the activity, despite statements by Adelson that gambling online is harmful to society. Adelson long claimed that his position on online gambling proliferation wasn’t due to competition.

Sands once owned a casino in Pennsylvania, but it elected to sell it after the Keystone State legalized a full array of online gambling in 2017. Pennsylvania did enact enormously high tax rates on operator online gambling revenues relative to other states with the industry.

Online gambling push

According to Eilers & Krejcik Gaming, rumors have circulated that the cash-flush Sands could be looking to buy 888 Holdings, one of the top players in the nascent U.S. online casino and sports betting market. Caesars and 888 have a partnership for online betting, perhaps most notably for online poker. Caesars recently reached a deal to acquire online and retail bookmaker William Hill.

It’s unclear what a Sands acquisition of 888 would do to the WSOP-branded regulated online poker site, which is powered by 888. Caesars owns the popular WSOP brand. While online poker has lagged behind online sports betting in terms of adoption, it’s expected to experience growth in the U.S. once again in the years ahead.

The deal to sell the Las Vegas properties comes during a pandemic that has greatly diminished fortunes for Sin City overall. Las Vegas Strip properties won a combined $3.7 billion from bettors in 2020, down more than 43% compared to 2019, according to figures from the Nevada Gaming Control Board. That decline far outpaced the rest of the nation in terms of gaming win decline due to the impact of COVID-19. Commercial casino win nationally was down by about 30%.

Las Vegas might have a harder time recovering than some other markets around the country due to its reliance on tourism, especially from overseas. The garbled U.S. pandemic response, as well as domestic political turmoil, doesn’t bode well for Las Vegas tourism, at least in the near term.

Sands once tried unsuccessfully to lobby for the right to build a large casino resort in south Florida, a state that has yet to legalize any forms of online gambling.

While Sands would be getting into the online gambling market at the back of the pack, it’s still the early days with the biggest markets (California, Texas, Florida, and New York) yet to be tapped.

Photo by Michael Vi / Shutterstock.com

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