A project to build Europe’s largest casino and conference centre in Spain, dubbed EuroVegas, “is potentially on its last legs”, a leading investment bank has concluded.
US casino giant Las Vegas Sands (LVS), which operates the Palazzo and Venetian in Las Vegas as well as properties in Macau and Singapore, announced in February that it had €9.8bn funding in place to kick-start the development in the town of Alcorcón on the outskirts of Madrid.
The project had been estimated to provide 240,000 direct and indirect jobs in the recession-hit country, where unemployment levels reached 27% in the first quarter of 2013.
However, Deutsche Bank’s Research Department announced in a note on LVS last week that despite the project not being a focus of discussion by its senior management at this time, “it’s our view that the project in Spain is potentially on its last legs”.
The bank’s research team blamed its negative view on the demanding “concessions required by LVS to make the project work from a return perspective”, on top of the hurdles presented by EU laws and Spanish regulations, which Deutsche believes are “too meaningful to overcome”. The bank concluded that while LVS remains undoubtedly committed to the huge project, “we struggle to believe a compromise can be found.”
LVS’ billionaire chairman and CEO Sheldon Adelson met recently with Spanish prime minister Mariano Rajoy to discuss the company’s demands for a string of tax and labour law concessions for investing in Spain. These also include a carve-out from the country’s anti-smoking laws to allow players to spark up in the gaming rooms of the casinos.
Madrid’s regional president Ignacio Gonzalez has promised that Spain’s central government will deliver the smoking concession, with regional health chief Javier Fernández-Lasquetty also stating last week that he supported the proposal and that Spain’s central government would soon implement the changes needed to bring this about. Prime minister Rajoy was however forced to deny that a decision on this had been reached following his meeting with Adelson, according to El Pais.
Anti-smoking campaigners have started a petition against the lifting of the ban, with protestors also accusing Spain’s government of creating a low-tax state within a country for Adelson and LVS, as well as suggesting the complex would create a haven for illegal drugs and prostitution.
LVS has to date covered 35% of the total investment required to complete the €17bn project, the first stage of which plans for the opening of four resorts of 3,000 hotel rooms by 2017, with this eventually developing over 18 years to house some 12 separate resorts with six casinos, a giant convention centre, three golf courses, shopping centres, bars, restaurants, theatres and other leisure facilities.
The resort will reportedly contain a faithful recreation of Times Square in New York, as well as twin 72-storey hotels.
Article written by Stephen Carter
