Palms purchase confirmed; Adelson gets rapped

It’s official: Red Rock Resorts has purchased The Palms for $312.5 million. It got a bargain when one considers the inventory that comes with the deal — the Palms Place condo tower, 710 hotel rooms, 85 of the most famous suites in Las Vegas, 1,250 slot machines and 48 table games, plus a spacious race and sports book. Its mix of tourist and locals clientele is consonant with the business model Station has been pursuing at Green Valley Ranch and Red Rock Resort. The fate of the Palms’ employees is up in the air but, since they’re not unionized, I’d be surprised if Station didn’t keep them in place. (The noisiest objections to ratification of the deal are certain to come from the Culinary Union, though.) Station paid almost 9X cash flow for the Palms, a reasonable multiple when its proximity to the Las Vegas Strip is considered. Besides, the overall purchase is only slightly more than half of what it cost ($600 million) to build the Fantasy Tower alone.  Station expects an 11% return on investment in the first year of operation, which is pretty good for the Strip market.

* Las Vegas Sands got a rap on the knuckles from the Nevada Gaming Control Board, which levied a $2 million fine on Sheldon Adelson‘s company for violations of Nevada money laws (the same imbroglio that saw Sands pay $9 million to the federal government for violations of the Foreign Corrupt Practices Act). Sands accepted the penalty without either admitting or denying wrongdoing, though you have to wonder why Adelson would part with $2 million if Sands were in the clear. As previously reported, the SEC faulted Sands for “inaccurate books and records” which “frequently lacked supporting documentation or proper approvals” for its Chinese dealings, including an attempt to buy a basketball team. For the privilege of clearing its name, Sands will have to pay an independent auditor to review its compliance practices for the next two years.

This isn’t Sands’ first run-in with the feds. In 2013, it agreed to pay $47 million for having looked the other way on multimillion dollar transactions involving whale Zhenli Ye Gon. Gon, “the largest all-cash, up-front gambler the Venetian-Palazzo had ever had to that point,” was too good a gift horse to look in the mouth, so Sands took his action without observing the proper currency-transfer protocols. Sands admitted it “likely” had violated the FCPA and, by dint of full cooperations with the feds, dodged prosecution.

* Speaking of money laundering, the Philippines is belatedly moving to close a loophole in its laws which exempted casinos from anti-money-laundering measures recently put in place. That loophole was wide enough for $81 million stolen from Bangladesh to make its way to Filipino casinos that acted as a laundromat for the cash. The U.S. State Department warns also that Chinese triads “have infiltrated casino operations and have facilitated prostitution, narcotics trafficking, loan-sharking, and suspect junket and VIP gaming tours.” Is it any wonder that U.S. casino companies give the Philippines a wide berth?

* Casino gambling makes up 58% of Macao‘s economy, which doesn’t sit well with the enclave’s government. “Currently, total non-gaming spending of tourists in Macao is comparable to that of Las Vegas. However, the percentage is diluted as Macao’s gross gaming revenue is far too high,” it said. However, casino operators got passing grades for meeting all the benchmarks set for them 10 years ago, boding well for renewal of their concessions. The bad news was for new junket operators, who will have to hike their amount of cash on hand a hundredfold. The government is also working on a credit database, partly to weed out high-risk players, the “blacklist” we’ve been hearing about for weeks.