Sands Quits, Bally’s Folds

And then there were nine … New York City casino applicants, that is. Yesterday, Las Vegas Sands COO Patrick Dumont—the guy who gave you the Luka Doncic trade—announced that the company wouldn’t be taking a bite of the Big Apple after all. It’s walking away from Sands Nassau and everything that comes with it, on the grounds that iGaming, if approved, would make New York State an unprofitable market.

This isn’t the first time Sands has left a new territory at the altar. Sheldon Adelson famously pulled the plug on negotiations in Japan, due to frustration with the country’s constipated political process and the insanely high cost of entry. Adelson was right then and Dumont is right now. While iGaming isn’t legal in the Empire State just yet, the LVS prez can read the tea leaves. Washington, D.C.‘s new policy of ‘every state for itself and Devil take the hindmost’ is already playing hob with budgets and New York is no exception. And what is a politician’s first recourse when confronted with a budget shortfall? If you said ‘more gambling,’ go to the head of the class. Because you can slap a heavy tax on gambling revenue and nobody will squeak. It’s a peculiar bit of self-hatred in an industry that has internalized society’s opprobrium. Americans are casino-crazy but the industry is still a red-headed stepchild. Go figure.

But we digress. Instead of sinking $6 billion (!) into a Gotham-area casino, Sands will attempt to address its wilted stock price by plowing $2 billion—double the previous commitment—into share repurchases. The company had to do something, as the 1Q25 earnings offered to reason to smile. Revenue, operating income, cash flow, profit? Down, down, down and down. Macao alone was off 5.5%. Outgoing CEO Rob Goldstein accentuated whatever positive he could find and, in the teeth of an impatient Macanese government, reiterated Sands’ commitment to economic diversification in the enclave. The bright spot was Marina Bay Sands in Singapore, which had cash flow of $605 million, surely (as Goldstein said) a record for a casino anywhere.

Goldstein also took time to slurp the government of China, when asked about current trade wars, which he minimized as a “dislocation.” (Which is sort like saying one’s head is dislocated by the guillotine.) Goldstein called for improved U.S./Chinese relations, saying, “We need it. They need it. Consumers need it. It’s good for the world. I’m very disheartened by what I’m seeing and hopefully it gets resolved quickly. But we’re not concerned about our position in Macao, nor should we be.” If Goldstein should worry about anything Macanese it’s that City Hall is taking a closer look at the latest casino concessions, given the official view that operators aren’t coming through with enough of the non-gaming amenities they’re contractually bound to add.

Analyst David Katz of Jefferies Equity Research found reasons to be optimistic, not least in the performance in Singapore, which considerably overshot his projections. He looked for The Londoner, Venetian Macao (above) and The Parisian to all improve their performances, and understandably liked the reallocation of NYC capital to share buybacks.

By contrast, Sands’ Macao properties missed even the low end ($63 million below Wall Street consensus) of the projections of Deutsche Bank analyst Carlo Santarelli, who described the quarter as “idiosyncratic.” He noted that mass-market play (Sands’ Chinese bread and butter) had diminished but felt that a difficult first quarter was passed. Still, he had several criteria for Sands to meet, including accelerated Macao performance, improved sentiment around the Chinese economy and better East-West relations. Easier said than done. As to trade hostilities, principal shareholder Dr. Miriam Adelson has $146 million worth of markers with the White House. Perhaps now is the time to cash some of them in.

Yesterday, like a true cheese-eating surrender monkey, Bally’s Corp. Chairman Soo Kim ran up the white flag over Bally’s Chicago. He caved to right-wing pressure groups, folding the company’s minority-investment IPO in favor of one as lily white as your nearest country club. In grandiloquent rhetoric, the company claimed it was merely “extending” the investment program to everyone in Illinois, particularly Chicagoans. This would superficially seem to thwart Texas crackers Richard Fisher and Phillip Aronoff, a couple of privileged malcontents. But lo! There are investment exemptions for citizens of Florida, New York State … and Texas. Funny that. (The same exception applied to the previous SEC filing, too.)

You may recall that Aronoff and Fisher were suing Bally’s on the transparently trumped-up grounds that it was discriminating against rich white men like themselves. (Both are failed congressional candidates, so posturing evidently comes naturally.) Now there’s no excuse for them not to plunge their millions into Bally’s Chicago—and lose their stuffed shirts. The best one can say of Kim’s cave-in is that it calls the two men’s bluff. Let’s see them put their money where their considerable mouths are. Even that won’t wash away the disgrace of having likened, in a court filing, the South Korean-born Kim, as well as men of color CEO Robeson Reaves and CFO Marcus Glover, as being akin to the Ku Klux Klan. Some people are impervious to irony, and the self-righteous Fisher and Aronoff take it to an obscene degree.

Perhaps the true reason for Bally’s capitulation to the up-tighty whiteys was sheer expediency. Before the plug got pulled on the initial minority set-aside, it had raised a bare $13 million. To put that in perspective Bally’s needs $250 million … putting it $237 million short. So some serious Honkybucks are clearly needed. The question is, can Bally’s find enough credulous (white) investors to put in anywhere from $250 to $25,000 for a piece of a very dubious pie? Also, how does Kim square his retreat with his stated commitment to Mayor Brandon Johnson (D) to sell 25% of Bally’s Chicago to “minority individuals and minority-owned and controlled businesses.” At first glance, it would appear that Bally’s is in breach of contract with Hizzoner. Either Kim or Johnson is going to have to do some very fast tap-dancing on this one.

In spite of the scant results from the first IPO, Loop Capital CEO Jim Reynolds claimed to have “seen interest from thousands of people who appreciate having access to this unique investment opportunity in a one-of-a kind casino and resort project in the city of Chicago.” That’s having trouble passing the laugh test. Kim spun the paltry receipts as “a substantial amount of interest in ownership from women and minority groups.” (You notice how “interest” never translates into dollars in this narrative?) Now he is grandly going to “make this investment available to even more Chicagoans who make this City so great we are extending our investment opportunity.” Yup, can’t miss.

A pox on all their houses.