weather icon Clear

Could COVID spur new round of gaming mergers, acquisitions?

During an earnings call in late April, Las Vegas Sands Corp. CEO Sheldon Adelson made an announcement that perked analysts’ ears.

“We’re interested in M&A.”

This was new. For years, Sands had been strictly focused on developing its own integrated resorts rather than a merger or acquisition.

“It was a shock. … It’s such a philosophical shift,” said Jefferies gaming analyst David Katz.

Adelson’s comment came after his company’s Las Vegas and Singapore resorts had been closed for weeks because of the coronavirus pandemic.

COVID-19 has hammered global tourism and the gaming industry, creating an environment that has weakened some companies. Experts say the crisis could provide opportunities to those with strong balance sheets, such as Sands, and lead to potential new entrants on the Strip.

‘Perfect time’?

“These types of companies are well-positioned to take advantage of the situation we find ourselves in,” said Reece Tomlinson, CEO of financial advising company RWT Growth, adding that now might be “the perfect time” for them to aggressively expand.

Robert Heller, CEO of New York-based financial advising company Spectrum Gaming Capital, believes some gaming companies will fold under the pressure of the COVID-19 crisis over the next six to 12 months, potentially offering opportunities for new players to enter the Las Vegas market.

“We think that there’s going to be gaming companies that … are not going to be able to service their debt, and may have to be restructured,” Heller said. “I think there may be opportunities where companies want to sell off their assets to bolster their liquidity.”

At least one company has alluded to having interest in a Las Vegas property. On May 13, Hard Rock International announced it had purchased the rights to the Hard Rock brand and related trademarks in Las Vegas.

Whether it’s new players or private entities interested in entering the Las Vegas market, Katz said ownership on the Strip could look different in the coming months — especially because there are companies looking to sell.

For months, a number of properties have been rumored or confirmed to be up for sale, including the Tropicana, The Cosmopolitan of Las Vegas and at least one Caesars Entertainment Corp. property.

Other analysts, including John DeCree of Union Gaming, have speculated that Wynn Resorts Ltd. could be another M&A target.

“Wynn always makes the top of the list when you talk about M&A because the assets are so desirable,” he said. “It’d be hard to say Wynn would agree to a sale at this point … but it might be something that makes sense for Wynn to consider.”

Wynn spokesman Michael Weaver declined to provide comment for this article.

In a May 6 report, DeCree noted that he doesn’t think Wynn is actively for sale or distressed; the company’s shares have nearly doubled since hitting lows in March.

But it could be the right timing for such a deal, with Wynn Resorts’ largest shareholder, Elaine Wynn, regaining the rights to move her shares later this year.

In August 2018 — shortly after Elaine Wynn’s former husband, Steve Wynn, resigned as chairman and CEO amid sexual misconduct allegations — Elaine Wynn agreed to refrain from changing her 9 percent stake in the company or joining groups seeking a takeover. In exchange, she was able to nominate Chairman Phil Satre to the board.

This agreement is set to last through Phil Satre’s board chairmanship.

Elaine Wynn declined to comment.

DeCree said in his report that Wynn’s fragmented ownership could be one reason for a broader exit event, especially if there were a stock component in the deal that would allow Wynn shareholders to cash out partially and roll equity into a combined company, “sharing in the upside.”

But he also believes “there would only be a select few potential buyers that would even be able to pull off an acquisition or merger the size of Wynn Resorts.”

Change of plans

Since its inception in 1988, Sands’ focus has been building new resorts in markets such as Las Vegas, Singapore, Macao or — until this month — Japan.

As recently as April 2019, Chief Financial Officer Patrick Dumont told investors during an earnings call that the company had no plans to steer off course.

“We think new development and renovations in very established, very positive growth market is the best way for us to deploy capital,” Dumont said on the call. “For us, it’s really tough to get comfortable with an M&A opportunity given how successful we’ve been, doing what we’ve been doing.”

But COVID-19 may have changed that.

“If you are the stronger balance sheet, when moments of turmoil occur, it does present opportunities,” Katz said.

Sands spokesman Ron Reese declined to provide additional comment and referred to statements made on the earnings call.

Sands’ decision to no longer pursue the development of an integrated resort in Japan allows the company to allocate its resources differently.

“We are grateful for all of the friendships we have formed and the strong relationships we have in Japan, but it is time for our company to focus our energy on other opportunities,” Adelson said in a May 12 news release.

The 86-year-old casino magnate has yet to reveal whether Sands is targeting any specific assets, but he said he’s still largely focused on the Asian market.

“We’ve always said that Asia is the best place for us,” he said on the April earnings call. “The population is the most inclined to play, to gamble than other populations. So it looks like if we can find something good in Asia, we’d certainly like to do that.”

The company’s latest earnings call presentation lists Macao, Singapore and South Korea as “principal areas of future development interest.”

Whatever Sands sets its eyes on is sure to be massive. Katz said finding the right M&A opportunity could be a challenge for Sands because whatever they acquire would have to be “at a high level.”

The Review-Journal is owned by the family of Las Vegas Sands Corp. Chairman and CEO Sheldon Adelson.

Contact Bailey Schulz at bschulz@reviewjournal.com or 702-383-0233. Follow @bailey_schulz on Twitter.

Don't miss the big stories. Like us on Facebook.
Business Videos
Is Nevada the ‘gold standard’ for casino coronavirus response? - Video
Whenever experts begin comparing gaming jurisdictions, you’re bound to hear the phrase “gold standard” dropped in the conversation. (Las Vegas Review-Journal)
Resorts World Las Vegas activates 100,000-square-foot LED screen - VIDEO
Resorts World Las Vegas activated its 100,000-square-foot LED screen on its west tower on Independence Day, showing a digital fireworks display. (Las Vegas Review-Journal)
Station Casinos president dies in watercraft accident - VIDEO
Richard Haskins, president of Red Rock Resorts Inc. and Station Casinos, died Saturday in a watercraft accident in Michigan, according to a statement released by the company. (Las Vegas Review-Journal)
Hockey arena opponents erred in ballot initiative - Video
Opponents of a minor league hockey arena in Henderson collected enough verified signatures to put the disputed project on the November ballot, but then a problem emerged: A procedural error on the petition.
Layoffs at 'The Drew' force staff to sue owner
Rj Business reporter Eli Segall talks about the lawsuit and the future of the unfinished hotel and casino.
Vegas tourists react to mask mandate - VIDEO
Governor Steve Sisolak announced on Wednesday a mandate to wear face masks starting Friday. Down on the Las Vegas Strip tourists reacted on camera to the news. (James Schaeffer / Las Vegas Review-Journal)
LVCVA #VegasSmart social media campaign brings awareness to wearing a mask - Video
Now that Gov. Steve Sisolak has announced requirements to wear masks in public settings in the state, the Las Vegas Convention and Visitors Authority will attempt to deliver the message to prospective visitors via their #VegasSmart social media campaign. (Heidi Fang/Las Vegas Review-Journal)
Nevada's unemployment crisis - Video
Thousands of jobless workers turned to the state for payments after the COVID-19 shutdown in March. DETR has struggled to handle record claims. (Las Vegas Review-Journal)
Caesars mandates guests to wear masks
Guests at Caesars Entertainment Corp. properties will be required to wear masks while inside its properties, effective immediately.
MGM Grand and Aria are reopening pool clubs - Video
MGM Grand’s Wet Republic Ultra Pool and Aria’s Liquid Pool Lounge plan to open July 2, according to a Wednesday statement from MGM Resorts International and Hakkasan Group. (Las Vegas Review-Journal)
Survey shows big reluctance to travel with coronavirus ablaze - VIDEO
Would-be travelers are becoming more pessimistic in their outlook about their safety when they travel. (James Schaeffer / Las Vegas Review-Journal)
Downtown's Circa resort will begin taking room reservations Wednesday - Video
Circa developer Derek Stevens confirmed that when the property opens on Oct. 28, persons under the age of 21 won’t be allowed. (Michael Quine/Las Vegas Review-Journal)
Downtown Las Vegas’ Circa resort will begin taking room reservations - Video
Downtown Las Vegas’ Circa resort will begin taking room reservations on Wednesday. (Las Vegas Review-Journal)
Culinary union expresses concerns about returning to work - Video
The Culinary union expresses its concerns about returning to work and the safety precautions that casinos are taking to ensure the safety of staff.
Bellagio poker room reopens with approval to host six-handed games - Video
The installation of plexiglass dividers between the players gave the Bellagio an edge over the other poker rooms open in Las Vegas. (Las Vegas Review-Journal)
Westgate reopens after coronavirus shutdown - Video
Jay Kornegay, vice president of Westgate Sportsbook, talks about the reopening of the casino on Thursday, June 18. (Rachel Aston/Las Vegas Review-Journal)
Final beam of Circa resort tower moved into place - Video
A crane whisked the final beam in the construction of downtown Las Vegas’ Circa resort property into place Friday morning, June 19, and crews paused momentarily, then continued working to ensure the casino's Oct. 28 opening. (Michael Quine/Las Vegas Review-Journal)
Paris Las Vegas reopens - Video
The Paris Las Vegas hotel-casino reopened its doors on June 18 after the statewide shutdown in response to COVID-19. (Mackenzie Behm/Las Vegas Review-Journal)
Masks required at casino table games in Nevada - Video
The state Gaming Control Board has ordered Nevada casinos to require players and spectators of most casino table and card games to wear protective face coverings.
Downtown Las Vegas’ Circa to open in October - Video
Circa resort-casino’s first five floors are set to open Oct. 28, according to CEO and developer Derek Stevens. (Michael Quine/Las Vegas Review-Journal)
Las Vegas movie theaters set July reopening date - Video
Las Vegas movie theater reopenings will start Regal, the valley’s largest exhibitor, announced Tuesday that it will reopen its theaters starting July 10, albeit in a modified fashion. (Heidi Fang/Las Vegas Review-Journal)
Contractors say they’re owed $36M for work done at Drew Las Vegas - Video
Three months after coronavirus turmoil shut off construction of the Drew Las Vegas, contractors have levied claims for more than $36 million in unpaid bills. (Heidi Fang/Las Vegas Review-Journal)
Contractors say they’re owed $36M for work done at Drew Las Vegas
Three months after coronavirus turmoil shut off construction of the Drew Las Vegas, contractors have levied claims for more than $36 million in unpaid bills. (Michael Quine/Las Vegas Review-Journal)
Many Las Vegas guests ignoring COVID-19 protocols
Casinos are putting safety first but many Las Vegas guests are not socially distancing.
As Las Vegas casinos reopen, not every employee is convinced it's safe to go back.
As Las Vegas casinos reopen, some employees aren't convinced it's safe to go back.
1.54M Americans filed for unemployment last week - Video
The U.S. Labor Department released the unemployment numbers on Thursday, June 11. (Las Vegas Review-Journal)
1.54 Million Americans Filed for Unemployment Last Week
1.54 Million Americans Filed for Unemployment Last Week. The U.S. Labor Department released the unemployment numbers on Thursday. The number of jobless claims was just below economists' predictions of 1.55 million claims. 1.897 million Americans applied for unemployment insurance the previous week. More than 44 million Americans have filed jobless claims in the past three months. Continuing claims nearly topped 21 million. The numbers follow the May jobs report, which revealed that more than two million jobs were added to the U.S. economy in May. Initial jobless claims continued the gradual downward trend. But it is still hard to square the claims figures with the much more upbeat news on the labor market from May’s Employment Report, Capital Economics, via Yahoo Finance
Visitors return to Las Vegas
Guests returned to Las Vegas casinos throughout the weekend. Casinos reopened on Thursday after being closed for 78 days because of the coronavirus pandemic.
Gov. Sisolak tours casino property after reopening - Video
Gov. Steve Sisolak and Sandra Morgan, chairwoman of the Nevada Gaming Control Board, participated in a tour of the Wynn Las Vegas hotel-casino where they share their first thoughts on casinos reopening. (Erik Verduzco/Las Vegas Review-Journal)
Treasure Island reboots operations after coronavirus shutdown - Video
When casinos shut down, not only were tourists unseen on the Las Vegas Strip, but jobs were temporarily lost. Treasure Island took the months off to remodel and fix the property, adjusting the casino for COVID-19 norms. Now that they’re open again, management is slowly hiring back staff as guests return. (Rachel Aston/Las Vegas Review-Journal)
Gaming boards back Eldorado-Caesars deal

The state Gaming Control Board on Wednesday unanimously backed Reno-based Eldorado Resorts Inc.’s $17.3 billion bid to acquire Caesars Entertainment Corp. and build the world’s largest casino operation.

Crowds slowly growing as Vegas reopens

The scene has been playing out for weeks now across town, as various Las Vegas institutions resume daily operations, each providing its own chapter in the story of a 24/7 city getting back on its high-heeled feet.