Failed EuroVegas Bid Was Still a Boon for Spanish Casinos

MADRID — Even though Sheldon G. Adelson, the American billionaire casino magnate, abandoned his plans for a $30 billion casino and leisure resort on the outskirts of Madrid last month, he has nevertheless helped get the roulette wheels spinning here for the first time in almost a century.

In mid-December, Mr. Adelson dropped plans to build a resort with six casinos, known as EuroVegas, after the Spanish government refused to accept his demands for financial concessions. Just days later, however, two small casinos opened in central Madrid, operated by Spanish companies that applied for new licenses in the wake of the EuroVegas plan.

“The arrival of a giant like EuroVegas meant that we had to do something and couldn’t just stand still,” said Pedro Olmedo Franco, a director of the Casino Gran Madrid, one of Madrid’s two new casinos. Without the EuroVegas project, he added, “we probably wouldn’t be here now.”

Unlike some other Spanish cities, Madrid had a longstanding ban on any casino operating within an 18-mile radius of the city center. But it was effectively lifted when its authorities started to compete against Barcelona to lure Mr. Adelson, who had decided to locate his project in Spain. While negotiating with Mr. Adelson and under pressure from Spanish operators concerned about unfair competition from EuroVegas, Madrid decided to also grant two other licenses for smaller Spanish rivals to open casinos in the heart of the city.Before last month’s opening, Grupo Gran Madrid already owned three other casinos in Spain, with combined revenue of 28 million euros, or roughly $38 million. Madrid’s other new venue, Casino Gran Vía, is owned by Grupo Comar, which has several casinos across Spain and the Dominican Republic, which generated combined revenues of about €110 million last year.

The two new Madrid casinos differ in style, but required comparable investments — about €20 million for Gran Madrid and €15 million for Gran Vía.

Neither operator said it could provide earnings details so close to their opening. Mr. Olmedo Franco said Gran Madrid had made “a slightly weak start” during the Christmas season. On a recent evening there, several gambling tables stood empty.

In emailed answers to queries, Javier García, the general director of Grupo Comar, said he was “very satisfied” with the debut of Gran Vía, located at a century-old avenue. The casino has recently averaged 1,500 visitors a day, each paying an entrance fee of €9 and required to bet a minimum of €2.5. Mr. García forecast a profit for this year, without providing specifics. He also said the new casino was opened “independent” of EuroVegas and other business developments.

Despite Spain’s recent economic problems, the two casinos are filling a clear gap in Madrid, said Miguel Córdoba Bueno, a professor of applied mathematics who published a book last year about gambling. Mr. Adelson’s initial choice of Madrid, he contended, shows that it is “by some margin the most attractive city to set up a casino.”

Mr. Adelson’s company, Las Vegas Sands, decided to drop EuroVegas just as other foreign investors have started to return to Spain. They had exited two years ago, when the country was plunged into a banking crisis. Since then, the banking sector has received an international bailout and the economy emerged from a two-year recession in the third quarter of 2013.

Spain still faces considerable economic challenges, including a 26 percent unemployment rate. But the casino revival has also made a contribution to Madrid on the jobs front. Gran Vía created 270 new jobs while Gran Madrid created 200 jobs, in addition to relocating 250 existing staff members to Madrid. Some of the new employees had little or no previous work experience, let alone in the casino business.“Croupier is certainly not what I expected to become, but it’s proving an exciting opportunity,” said Valeria García, 21, who has been completing a history degree at Madrid’s Complutense University.

Ms. García oversees a roulette table for six hours an evening. Croupiers like her earn €1,500 a month to start, with pay rising to about €2,400 including tips. On average, the casino pays staff €1,600 a month.

“Given how things are in Spain now,” she said, “it’s unfortunately not with history that I was going to find a job.”

With Spanish consumption still in the doldrums, Madrid’s new casinos have been targeting foreign tourists, placing advertisements in the city’s main hotels. Last year, Spain welcomed a record 60.6 million tourists, even though the number of people visiting the Spanish capital fell about 5 percent to 4.2 million.

At Gran Vía, one of the rooms has an Oriental design to help attract Chinese tourists. Both venues have also teamed up with celebrated restaurant owners — Gran Vía with Jesús Santos, a specialist of Basque cuisine, and Gran Madrid with the Sandoval brothers, who own a Michelin-starred restaurant near Madrid.

While EuroVegas would have created thousands of jobs, it also generated criticism as a “Sin City” project, with opponents warning that by promoting gambling on such a large scale Spain might encourage criminal activities like prostitution and money laundering. The two Madrid newcomers have not drawn similar opposition, perhaps because they are minnows compared with the extravagant and giant casinos Mr. Adelson has sprawled across Las Vegas or Macau.

Mr. Adelson’s EuroVegas would have provided formidable competition for smaller Spanish operators. On the other hand, the Spanish companies anticipated that EuroVegas would help bolster the Spanish gambling sector as a whole and raise its international profile.

They also hoped to benefit from the same tax concessions that Mr. Adelson wanted to obtain for EuroVegas. Mr. Adelson scrapped his plans and turned his sights on opportunities in Asia after failing to win special tax benefits and an exemption from a nationwide ban on smoking in public spaces.

“We are now negotiating once more to get a better fiscal deal, but this time without the support of EuroVegas,” Mr. Olmedo Franco said.

The Madrid casinos want the authorities to cut the gambling tax to 20 percent from the current 45 percent. Ángel Ruiz de Apodaca, professor of administrative law at the University of Navarra, poured cold water on the casinos’ chances of winning major concessions.

“Mr. Adelson didn’t get the treatment that he wanted, so I don’t think that any special deal or fiscal advantages will be seen as acceptable for the new casinos either,” he said.

Both operators also face the risk that their downtown locations will hurt their existing casinos outside Madrid.

Eduardo Ladrón de Guevara, a Madrid fashion designer, said he would probably make regular visits to Gran Madrid rather than travel to the casino in Torrelodones, 29 kilometers outside Madrid. “This is a much more comfortable experience and you also don’t have to worry any longer about drinking and then finding a way to get home,” he said.


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