The death of billionaire Sheldon Adelson has triggered sea change at the company he founded, Las Vegas Sands. Adelson died in January, at the age of 87, and the changes began almost immediately when the company announced the sale of its Las Vegas properties, the Venetian, Palazzo and Sands Expo Center to New York-based Apollo, the former owner of Caesars Entertainment, and the REIT VICI Properties. While that sale occurred in March 2020, Adelson had previously said the sale of those properties was being considered.
Last week, the company backed two amendments in Florida that would permit the expansion of gaming in the northern part of the state, where it has previously been prohibited. Both amendments seem to be designed to avoid conflicts with the Seminole tribe, which last month signed a compact with the state of Florida guaranteed billions of dollars to the state in exchange for several more south Florida casinos and complete control of sports betting within the state.
Another amendment proposed by FanDuel and DraftKings directly challenges that sports betting monopoly, and the Seminoles are sure to strongly oppose it. Not so for the northern Florida expansion.
The two amendments to expand gaming in Florida would permit the existing card rooms to operate the facilities as long as they were, according to one bill, “more than 130 miles on a straight line from all tribal facilities.” The second bill shortens the straight line to 100 miles. The licensees would be required to invest either $250 million or $500 million to offer full-service casino resorts, including slots and tables, hotels, food and beverage, and meetings and convention facilities.
Gary Bitner, spokesperson for the Seminoles, said the tribe has no issue with the amendments.
“Unlike the proposed sports betting ballot initiative, neither of these initiatives would interfere with the new gaming compact, nor would they impact the $2.5 billion revenue-sharing guarantee for the state of Florida over the compact’s first five years,’’ he said.
But the biggest change was yet to come. For years, Adelson was among the most vociferous opponents of online gambling. He once declared he was “willing to spend whatever it takes” to stop the expansion of the industry. In 2014, Adelson created the Coalition to Stop Internet Gambling with the sole purpose of restoring the federal ban on internet betting.
And last week, with the establishment of a digital gaming investment team, the Sands Corp. made its first foray into the virtual space.
The company announced plans to become a strategic investor in business-to-business digital gaming technologies. The new team will be led by Davis Catlin, who spent 14 years with Sands Capital Management in Arlington, Virginia (no relations to the Las Vegas Sands Corp.).
According to Sands Chairman and CEO Rob Goldstein, the company is “determined to grow its leadership position within the industry and is committed to doing that through strategic steps we think best position the company for future growth. Digital gaming and other related offerings are still very much in the early stages of development, and we believe there is an outstanding opportunity for us to invest in the technologies being developed.”
He added that the Sands’ “platform, expertise and financial resources, together with the investment team led by Davis, will provide meaningful opportunities to … generate significant long-term benefits for the company. And just as our integrated resorts were not built in a day, by being patient and investing for the long-term, we believe these investments in digital gaming technology will deliver significant returns for the company and its shareholders.”
Beyond that, details of the company’s plans are scant. But with Adelson’s longstanding opposition to online gaming, the company, with mega-resorts in Macau and Singapore, is entering unexplored territory. Bernstein Research noted, “Getting in at this juncture would be fraught with risk. A go-it-alone strategy in today’s dynamic market would be difficult and acquiring an existing sports betting/iGaming operator would be very expensive based on current valuations.”
But Sands is certainly flush, having sold its Las Vegas operations in March for $6.25 billion. The firm said at the time that it was “focused on reinvestment in Asia and high-growth opportunities in new markets,” possibly including Texas, Florida and New York City.
Goldstein first hinted the company would go online during an earnings call in January, shortly after Adelson’s death. “I have very strong thoughts about (online gaming),” he said at the time. “We are exploring it and if we have something concrete to say we will tell you. Right now it’s simply exploratory.”
At a June conference, Goldstein acknowledged the company’s commitment to “being in that space… not just in the U.S,” but possibly in Canada, Europe or South America.
According to the Nevada Independent, there’s been talk that the company will buy a major sports betting or online gaming provider. Eilers & Krejcik Gaming analyst Chris Grove debunked the speculation, saying last week’s announcement “definitely leans more in the direction of a (business-to-business)-focused company versus a company with a heavy direct-to-consumer angle.
“I think there’s definitely a world where Sands makes a series of smaller bets in younger companies and builds something new from that foundation,” Grove said, “versus trying to accomplish their goals with a single splashy acquisition.”
Back in April, Deutsche Bank gaming analyst Carlo Santarelli said the company is taking a prudent path to online gaming. “Given it still remains an embryonic market, Las Vegas Sands is taking a smart and targeted approach, whereby they could leverage their balance sheet to pursue either (mergers and acquisitions) or organic growth opportunities within the U.S. or abroad,” he said.
Back in Florida, the three proposed constitutional amendments have produced a flood of lobbying dollars.
In response to the new gaming compact signed by Seminole Tribe officials and Florida Governor Ron DeSantis and the introduction of the proposed amendments, three out-of-state gaming giants made $62 million in political contributions to influence the future of sports betting and casino gambling in Florida.
Among other contributions, FanDuel and DraftKings each gave $10 million to Florida Education Champions, a PAC supporting a 2022 ballot initiative asking voters to authorize online sports betting at all Florida parimutuels, professional sports stadiums and anywhere else in the state. Florida Education Champions is marketing its constitutional amendment campaign by pledging to dedicate sports betting tax revenue to education.
The third out-of-town player is Las Vegas Sands, which has long been trying to enter the Florida gaming market. Las Vegas Sands is controlled by Miriam Adelson, the wife of the company’s late founder and CEO, Sheldon Adelson. In March, the company sold its Las Vegas properties and announced its plans to expand into other states.
Observers said Sands may be interested in operating a Florida casino either by partnering with or buying out an existing permit holder.
The Genting Group also is said to be interested in the Doral resort; or a casino in Miami where the company purchased the former Miami Herald site in 2011, hoping to open a waterfront casino resort.
The new Seminole compact does allow an existing license to be transferred. But to obtain a license to offer sports betting or casino games at those venues, Adelson would need statewide approval from voters under Amendment 3.
“The compact has opened the floodgates to everybody getting everything now,” said John Sowinski, director of No Casinos, the group that managed the 2018 Amendment 3 campaign.
Gearing up for ballot issues in 2022, lobbyist Nick Iarossi, who has represented Las Vegas Sands, said Sands formed Florida Voters in Charge and gave it $17 million to collect signatures as soon as they decide what their gambling expansion proposal will look like. Iarossi said, “There’s ongoing talks but there are multiple versions of the language that can be filed.”
Voters In Charge spokesperson Sarah Bascom added, “We are contemplating various options with no intention to violate the recently passed compact/revenue sharing agreement. Our initial donor, the Las Vegas Sands Corp., has long been interested in Florida and we look forward to sharing more about the Florida Voters in Charge effort in the coming weeks and months.”
However, getting an issue on the ballot in time for the 2022 elections will be a huge task. Florida law prohibits petition companies from paying signature gatherers per signature. There are a limited number of companies that perform signature-gathering work. And because of the record turnout in the 2020 elections, more signatures will be needed by the February deadline.
The 30-year, $500 million-a-year gaming compact signed by the Seminole Tribe and the governor would allow voters to approve additional casinos in Florida. It states as long as a new casino is 100 miles from any of the tribe’s casinos and has the tribe’s consent, it would not violate the compact. In Miami-Dade and Broward counties, a new casino could not be located within 15 miles of the Seminole Hard Rock Casino near Hollywood.
The Seminole Tribe naturally wants to defend the new 30-year, $500 million-a-year gaming compact and have some influence over the 2022 ballot, so it contributed $10 million to the PAC Voters in Control Inc. The U.S. Department of the Interior still must approve the new compact.
Tribal spokesman Bitner said the tribe strongly opposes the constitutional amendment proposed by FanDuel and DraftKings, which would legalize sports betting outside of the tribe’s agreement with the state. He said, “This is millions of out-of-state corporate dollars to try and manipulate the people of Florida, who are smarter than that. They think they can buy their way into the state. Our team intends to use our Florida dollars to protect the interests of the people of Florida.”
If the FanDuel-DraftKings initiative gets enough signatures and appears on the 2022 ballot, and gets 60 percent of voter approval, it would derail the compact provision that allows the tribe to enter into agreements with existing parimutuels to operate sports betting at their facilities by having all transactions go through the tribe’s servers.
Besides giving the tribe exclusivity to operate online sportsbooks in Florida for the next 30 years, the compact also would pave the way for a huge expansion of the Seminoles’ gaming empire. The tribe would be allowed to operate craps and roulette at all of its seven casinos and to build three more casinos on existing tribal property east of Florida’s Turnpike in Broward County.
In return, the tribe would give the state $500 million a year in revenue-sharing payments. However, if the sports betting component is ruled unconstitutional by the courts or rejected by federal regulators, or if a constitutional amendment is passed authorizing sports betting outside of a tribal server, the Seminole Tribe would reduce its annual payments to the state by $100 million.
The sports betting provision of the Seminole compact is the subject of a federal lawsuit filed by the Havenick family’s West Flagler Associates, owner of Magic City Casino in Miami. The lawsuit claims the sports betting language in the compact is unconstitutional. The Havenicks argue the agreement authorizing sports betting outside of tribal lands in Florida is in violation of the Indian Gaming Regulatory Act.
In an effort to protect its interests, West Flagler Associates created its own political committee, People Against Regulatory Legislation Addressing You. Chairman Isadore “Izzy” Havenick, vice president for public affairs, said West Flagler Associates gave the PAC $15 million.
“The committee was formed in order to make sure our family business and other multi-generational family businesses are not excluded from any conversations that could cannibalize us. We know there are national companies out there that see the potential of our great state, and we believe we should all work together to give the best product to the people of Florida in an inclusionary fashion,” Havenick said.
The multi-million political contributions from FanDuel, DraftKings, Las Vegas Sands and West Flagler Associates represent the largest contributions made so far to the Florida 2022 election cycle, according to campaign finance records.