Las Vegas Sands Corp., the casino company controlled by billionaire Sheldon Adelson, abandoned a plan to build a mega-resort in Spain for more than $30 billion and will focus on Asia instead.
“We do not see a path in which the criteria needed to move forward with this large-scale development can be reached,” Adelson said today in a statement. Bloomberg News reported the decision earlier today.
The decision by Sands, the world’s largest casino operator, ends prospects for a development that proponents said would have helped improve Spain’s ailing economy and cut its 26 percent jobless rate. The project, announced in February, would have created Europe’s largest resort, dubbed Eurovegas, in the the Madrid suburb of Alcorcon.
Adelson, who visited the capital city last month, sought assurances from Spanish officials that tax rates and other conditions wouldn’t be changed by future governments. He also sought exemptions to Spain’s ban on smoking in public places and limits on Internet gambling.
Spanish ministers had said the smoking law would be changed to encourage the investment. The government was also seeking ways to offer the company guarantees that it would be compensated for any changes in legislation that might hurt its business, a person familiar with the process said last month.
The European Union, the Spanish government and the Madrid administration couldn’t accept all of the conditions sought by Las Vegas Sands, Deputy Prime Minister Soraya Saenz de Santamaria told reporters today after a weekly cabinet meeting.
“The government has the responsibility to attract to Spain all the foreign investment possible and especially that which creates jobs,” said Saenz de Santamaria. “It also has the duty to protect the general interests of all Spaniards.”
Deputy Economy Minister Fernando Jimenez Latorre said earlier today the government had been trying to respond to the requests it deemed “reasonable” and had been negotiating with European authorities over their compatibility with European law. He hadn’t been notified of the decision, he said.
“If there are more requests and Eurovegas decides it can’t go ahead unless all the requests are accepted, that’s their independent decision,” he told reporters today. “The investment is good in itself, but it also depends on the conditions.”
A spokeswoman for Madrid’s regional government and a spokesman for Alcorcon declined to comment.
Las Vegas Sands rose 0.5 percent to $76.57 at the close in New York. The shares have gained 66 percent this year.
“It was becoming more and more apparent that the Spanish government could not meet all the conditions that LVS had requested and we would have viewed a decision to go forward without these conditions as a negative,” John Kempf, an analyst at RBC Capital Markets LLC in New York, wrote in a note today. Las Vegas Sands is now likely to return capital to shareholders via dividends and share repurchases, he said.
The Eurovegas project was due to be carried out in phases over 10 to 12 years and would have included 12 casino resorts with 36,000 rooms. The pro-business People’s Party government in Spain had said the development would help the country recover from a five-year economic slump and lower the 57 percent youth unemployment rate.
Investors had expressed skepticism that the project would be economically viable. Adelson said on several occasions that the company would only pursue developments that would produce 20 percent cash-on-cash returns.
Adelson, ranked 12th globally in the Bloomberg Billionaires Index with a fortune estimated at $36 billion, has also said he was interested in new casino resort opportunities in South Korea and Japan. The company gets most of its revenue from Asia, where it has resorts in Macau and Singapore.
The proposed first phase would have included four casino-resorts with 12,000 rooms, according to the company.
If all three phases were completed, the project would boost the region’s gross domestic product by 4.5 percent, according to estimates by Promomadrid, a government-owned company that tried to attract foreign investment to area before being dissolved last year. It projected the development could create 164,000 jobs directly and a further 97,000 indirectly, or about half the number of unemployed people in the region.