Madrid gets ready for ‘EuroVegas’

The decision by Las Vegas Sands to choose Madrid for a “EuroVegas” casino project was welcomed by city officials, but potential obstacles include the company’s decision to fund only 35% of the resort and to demand changes in local laws.

Ana Isabel Marino, Madrid councillor 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 announced the decision to choose Madrid over Barcelona for the multi-billion dollar gambling resort.

Adelson has said he wanted to invest about $22bn in the project. The statement made it clear the company will allocate no more than 35% equity in the development.

With Spain in recession and considering a bailout, raising 65% of the cost could be difficult. There is no guarantee officials would agree to change Spanish laws to allow gamblers to smoke in the casinos and let the new buildings to soar above the skyline.

Analyst Ramon Zarate said: “I see capitalisation by banks as being very complicated.”

Zarate of the EMASI think-tank said banks were currently deleveraging construction projects, so Adelson would need to “pool foreign venture capital funds, but it’s complicated”.

The Las Vegas Sands statement left some room for negotiation 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 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.

The capital of debt-ridden Catalonia unveiled its own plans for a €4.8bn “Barcelona World” resort 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 centres, a theatre, and offices, all on land with no planning modifications required. But financing for the resort has not been signed.

Regional sustainability counsellor 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 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.

Gaming investors have considered Spain before. Harrah’s Entertainment explored building a Las Vegas-style casino-hotel near the picturesque medieval city of Ciudad Real, 190km south of Madrid, in 2005.

Although an airport was built there and the site was reachable in less than an hour by train from Madrid, nothing came of the plan.

Through its majority-owned subsidiary Sands China, 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.

Its entry into the casino market in the former Portuguese colony near Hong Kong spawned legal battles in Macau and Las Vegas.