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Las Vegas Sands Cancels $30B Spanish Casino-Resort Project
Sheldon G. Adelson, the billionaire casino magnate, on Friday abandoned his plans to build a $30 billion gambling and leisure resort on the outskirts of Madrid after failing to win financial concessions and other favors from the Spanish government.
The decision by Mr. Adelson's company, Las Vegas Sands, to drop its EuroVegas resort project is an economic blow not just for Madrid but for Spain as a whole. The country has been pining for foreign investment to help revive its economy and cut its 26 percent unemployment rate.
Although Spain recently emerged from a two-year recession, it remains mired in stagnation, deeply troubled by low consumer spending and a domestic credit squeeze that lingers from the country's housing bust and the subsequent banking bailout in 2012.
But while Mr. Adelson was openly welcomed by the government, several Spanish civic and religious groups, opposed to gambling, sought to block the EuroVegas project. Some critics warned the authorities against bending Spanish legislation to suit Mr. Adelson, by granting him special tax benefits as well as accepting his request to exempt EuroVegas from a nationwide ban on smoking in public spaces.
Political opponents of the governing Popular Party also argued against granting Sands any tax concessions.
With an estimated net worth of $28.5 billion, the 80-year-old Mr. Adelson is one of the richest men in the world. The bulk of his wealth comes from the extravagant casino resorts he has developed in Las Vegas, the Venetian and the Palazzo; several built or redeveloped more recently in Macao, a former Portuguese colony that is now part of China; and one in Singapore.
Mr. Adelson, long a supporter of conservative causes, has been an active player in American politics. In the 2012 presidential election, he donated more than $60 million to his preferred candidates, first Newt Gingrich and then Mitt Romney, a sum that made him the single largest financial contributor in a presidential race.
In a statement on Friday, Sands said that it had dropped the Madrid project after an extensive review and that it would instead pursue alternative investment opportunities in Asia. It did not detail the review's conclusions.
"Developing integrated resorts in Europe has been a vision of mine for years," Mr. Adelson said in the statement, "but there is a time and place for everything, and right now our focus is on encouraging Asian countries, like Japan and Korea, to dramatically enhance their tourism offering through the development of integrated resorts there."
Mr. Adelson's investments, dependent as they are on securing regulatory approval from states and foreign governments, have frequently courted controversy. Earlier this year, Mr. Adelson's company, Las Vegas Sands, disclosed in a regulatory filing that it might have breached a federal law prohibiting bribery of foreign officials.
For some time now, Mr. Adelson's business activities and investment plans in China have been closely scrutinized, including payments Sands made via a separate Chinese company. In 2010, his company was sued by a former employee who claimed he had been forced to impose improper pressure on Chinese government officials.
Macau, the gambling mecca in China, has become the main driver of Mr. Adelson's wealth. Analysts say that overall gambling revenue in Macau was $38 billion last year - close to 90 percent of its economy - compared to about $6 billion in Las Vegas.
In Europe, casino gambling has been relatively limited; the Monte Carlo casinos in Monaco, the largest on the Continent, generate about $230 million in gambling revenue. Mr. Adelson, who announced his plans to bring a megaresort to the Continent in 2009, would have overwhelmed that.
While there were rumors from time to time that Mr. Adelson might be tempted if the Greek government were prepared to essentially let him take over an island in the Aegean, it appears that from the start he seriously considered only Spain for the immense project.
In September 2012, after a lengthy competition between Spain's two largest cities, Sands chose Madrid for EuroVegas rather than Barcelona. At the time, Mr. Adelson's choice was seen not only as a fillip for Madrid's regional economy but also as a sign that foreign investors were ready to return to Spain. Underlining the importance of such a project for the country, Prime Minister Mariano Rajoy met three times with Mr. Adelson to discuss his EuroVegas plans.
The project had already run into delays, as Sands originally planned to start construction of EuroVegas in mid-2013 and complete the complex within 10 years.
Mr. Adelson's U-turn came after Mr. Rajoy's government reviewed his request for the smoking exemption, as well as his financial demands. According to Spanish officials, those included an insistence that the government guarantee financial compensation for any changes in the country's gambling laws that could hurt EuroVegas and grant EuroVegas a special rate on the gambling tax. Spain's review also included discussions with the European Commission to determine whether making such concessions would violate European antitrust rules.
Sands proposed EuroVegas as a giant resort that would operate 12 hotels with a total of 36,000 rooms, six casinos with 18,000 slot machines, and three golf courses. But Sands remained evasive about how it would finance the project, saying last year that its own contribution would be 25 to 35 percent of the equity of EuroVegas and that it would look for "financing options from the capital markets" to cover the rest of the cost.
Politicians in opposition parties warned Mr. Rajoy and Madrid's regional government, which is also in the hands of the conservative Popular Party, against providing any special fiscal or regulatory treatment for EuroVegas.
Tomás Gómez, the Socialist party's regional leader in Madrid, said last year that even though EuroVegas would help his city, the Socialists would work to ensure that the law was the same for everybody.
Spain under the rule of Mr. Rajoy has taken aggressive steps in hard-hit Southern Europe to ease the path for foreign investors, especially in the automotive industry, where exports have played an important part in the country's tepid economic recovery.
Raphael Minder reported from Madrid and Landon Thomas Jr. from New York.
This article was revised to reflect the following correction:
Correction: December 13, 2013
An earlier version of this article incorrectly described the individual who sued Las Vegas Sands in 2010. He was an employee, not an employer.
Source: NY Times
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