Las Vegas Sands executives said they’re willing to be patient and wait out sports betting and digital opportunities in the U.S., while focusing on land-based investments in New York, Asia, and elsewhere after closing on a $6.25 billion sale of its Strip assets this quarter.
During its fourth quarter earnings call Wednesday, LVS reported that its 2021 operating loss was $689 million, compared to an operating loss of $1.39 billion in 2020. Net loss attributable to LVS was $961 million, or $1.26 per diluted share, in 2021, compared to net loss of $1.69 billion, or $2.21 per diluted share, in 2020.
“Our results continue to reflect the pandemic’s impact,” said Robert Goldstein, chairman and CEO. “Travel restrictions continue to affect visitation and our financial results in both Macau and Singapore this quarter. We did have positive (adjusted earnings) in both markets and we remain confident in the recovery of both Macau and Singapore (once visitation returns).”
Before the omicron variant started to spread, Goldstein said, visitation from Indonesia, Malaysia, South Korea, Australia, and Thailand showed potential to help with Singapore’s recovery. He said there’s so much confidence in the long-term opportunity that they embarked on a $1 billion renovation at Marina Bay Sands, introducing luxury suites to appeal to premium customers.
Investment in resort properties is at the forefront of its strategy.
In March 2021, LVS entered into agreements to sell its Sands Venetian and Palazzo resorts and Sands Expo and Convention Center for $6.25 billion to Apollo Global Management and Vici Properties.
“The sale of Las Vegas creates liquidity and optionality as we pursue large-scale destination resorts in the U.S. and Asia, and we continue to explore our digital presence,” Goldstein said. “We’re exploring multiple opportunities at this time.”
President and COO Patrick Dumont said they’ve been consistent in their long-term strategic plan on how to grow the business. It dates back to the late Sheldon Adelson, founder and CEO.
“Sheldon stated from the beginning that he’s a developer of large-scale projects, and I think that ethos continues today in our company,” Dumont said. “We’re very excited about some of the opportunities we have in front of us. The way we see the capital coming into our system from the consummation of the Las Vegas sale is to grow the business.”
In addressing digital gaming and sports betting, Goldstein said they’re not an immediate focus of that capital. They’ve followed what’s been happening with digital equities and the struggles in that space, he said.
“I believe there will be a day when sports betting and igaming will be very successful businesses and we’ll continue to look for the opportunity and wait patiently,” Goldstein said. “It hasn’t been a bad idea to wait the last six to eight months to see how this shakes out. There’s been a lot of blood spilled and we will continue to evaluate if there’s an entry point that makes sense. Our bread and butter is building Asia land-based. You can’t replicate a $5 billion business, which we think will come back next year.”
Goldstein said their “first order of business” is to make sure their balance sheets are “pristine,” which they will be upon closing the Strip sale.
As for land-based opportunities, Goldstein said they continue to be “big believers” in the New York market and a proposal by New York Gov. Kathy Hochul to make three licenses available is encouraging.
“We’re in the hunt,” Goldstein said. “I wouldn’t want to overplay our hand and say what our opportunity might be. It’s a massive market, underserved by the current product. By any metric, that should be a massive market for us. We were there last week and the team is on the ground hoping to get a license.”
Goldstein admitted it’s been a struggle to gather signatures in Florida for a casino-expansion proposal. He said they’re “trying to be in the hunt in Florida,” though it’s not an easy process to go through. He deemed Florida another underserved market where opportunities exist for a top-tier land-based opportunity.
“The same goes for Texas, but Texas is a few years away,” Goldstein said.
Earlier this week, Wynn Resorts announced it will develop a multi-billion resort with gaming facilities on Al Marjan Island in the United Arab Emirates. It will be the first legalized gambling in the Emirates (Caesars has a resort that doesn’t have gambling).
“If you go to the UAE and see the investment going on, it’s remarkable,” Dumont said in response to a question about Wynn Resorts. “The scale and quality of the investment are unique to the world. It’s a very special place. I understand why Wynn would have interest in going there. It’s a tremendous tourism market with a lot of potential. It’s the economic center for that region.”
While Dumont said the UAE is a place to continue to watch, there are a lot of high-quality markets for LVS and they’re keeping all options open to deploy capital in high-quality developments.
When it comes to sports, Dumont told analysts that it’s not just about looking at sports betting opportunities, but a variety of digital opportunities in a variety of markets. Like Goldstein said, the executives aren’t in a hurry, he added.
“We’re not rushed,” Dumont said. “We’re building teams and making long-term investments. We’re focused on a return on investment. We’re looking at it through a long-term strategy that can blossom into something meaningful. We’re not chasing certain specific areas that may have valuations that peaked.”
