It would be hard to imagine a bigger story than the sale of the Las Vegas Sands properties. Just two months after Sheldon Adelson died, the Sands announced it had reached a deal to sell its real estate and gaming operations in Las Vegas in two separate transactions. VICI Properties is buying the real estate and Apollo Global Management is acquiring the operations.
Chairman and CEO Robert Goldstein said the company was going to concentrate on its Asian properties. “As we announce the sale of the Venetian Resort, we pay tribute to Mr. Adelson’s legacy, while starting a new chapter in this company’s history,” he said. “This company is focused on growth and we see meaningful opportunities on a variety of fronts. Asia remains the backbone of this company and our developments in Macau and Singapore are the center of our attention.”
Undoubtedly, the deal was in negotiations while Adelson was alive; indeed, it had been hinted at earlier. One factor that might have contributed to the timing of the deal is Adelson’s widow, Miriam Adelson, who inherited 57 percent of the company, but is unlicensed in Nevada. If the company remained in Nevada, she would either have had to get a gaming license or sell her stock, and a forced sale would be good for neither Miriam nor the Sands. This option avoids licensing and a sale for the moment.
The press in Asia is applauding loudly and looking forward to increased investment in Singapore and Macau. However, Ben Lee of IGaminiX Management and Consulting thinks the reason might be the upcoming license renewals. Lee says there is no place for additional investment in either Macau or Singapore at the moment. But to receive a renewed license, it might be best not to be an American company with American political ties: “It’s either [related to] their cutting all overt ties with the U.S. to improve their chances of getting a new concession or a prelude to a total cashing out by the family now that the patriarch is no longer at the helm,” Lee said.
In Australia, there is speculation that LV Sands might use some of its newly begotten wealth to buy the regulatorily challenged Crown Resorts. “Crown Resorts could be a good fit for Sands in the long run. The company is currently in turmoil, due to regulatory challenges following revelations of AML violations and control problems. Several directors (including the CEO) have resigned, and the company is ripe for new ownership and management,” wrote Bernstein analyst Vitaly Umansky. Of course, there will be speculation about the Sands seeking a resort opportunity in Japan, and while we are at it, why not the Philippines, Vietnam, Cambodia and Korea?
There is another side to the transaction: the buyers. There has not been much speculation yet about them. The initial reaction has been positive. Macquarie Securities, J. P. Morgan and Roth Capital Partners all think the deal implies that Las Vegas will recover more quickly than previously thought.
“We believe the transaction highlights the value of Las Vegas and further confirms others’ views that the recovery will be faster than feared,” Macquarie Securities gaming analyst Chad Beynon told investors.
No one yet has brought up licensing and in gaming, it is always an issue. VICI owns much of the casino real estate in Las Vegas already and that might raise red flags for regulators. VICI also intends to sell stock to finance its portion of the deal. Apollo? Well, it has a piece of everything — from Twinkies and jewelry to banking and plastics. Regulators might wonder if the company does not already have too much on its plate. The deal is expected to close in the four quarter, which suggests that there are no licensing issues.
In other news, Borgata has amended its complaint against Ocean Resorts, accusing the resort of systematically raiding Borgata for its employees. It is not so surprising, since Borgata generates more than twice that of any other casino in Atlantic City, and Ocean Resorts inhabits the thrice-failed Revel and is at the bottom of the revenue chart. The story hardly measures up to the Sands leaving Las Vegas, but it did pique readers’ interest.
Finally, Wilton Rancheria and Boyd Gaming secured the funding for a new resort near Sacramento. Like the Atlantic City story, a new Indian casino in California hardly measures up to the sale of Adelson Las Vegas, but for Reno, it is a very big deal. It will be one more new resort standing on Reno’s air hose.
