Las Vegas Sands Corp Quietly Bows Out of Online Gambling Stage

Las Vegas Sands (LVS) has called it quits barely eighteen months after launching its online gaming division. The company, which was already years late to jump onto the iGaming bandwagon and had initially been firmly against the internet gambling space, has exited as quickly as it had entered.

The late Sheldon Adelson, former Chairman and CEO of Las Vegas Sands actively opposed online gambling. He believed that iGaming would lead to underage gambling, increase problem gambling, and reduce land-based casino revenue. Thus, in the decade leading to his untimely death, Adelson spent millions of dollars in several states funding like-minded organizations to fight against any efforts to legalize and grow the online gambling sector.

For example, since LVS was American Gaming Association's (AGA) biggest sponsor, Adelson threatened to withdraw funding if AGA went ahead with its efforts to lobby on behalf of internet gambling initiatives.

Too Little Too Late?

Following Adelson's death, Rob Goldstein was named the new chairman and CEO of LVS in January 2021. Unlike his predecessor, Goldstein noted that the company would work on joining the internet gambling space. Regrettably, due to Adelson’s efforts against Sands becoming a significant player in the online gambling industry, it was always going to be a difficult and expensive process.

At that time, it was already late for Sands to build its consumer-facing online brand or technology. As such, Goldstein picked Davis Catlin and David Williams as the company’s strategic investors to run its online gaming business. In addition, LVS invested in companies like US Integrity, which provide the technology and data analytics used to detect illegal wagering behavior, such as match-fixing. Overall, Las Vegas Sands had pumped about $50 million into the online gambling venture.

The news of trouble in paradise was first reported by Jake Pollard and Scott Longley in the Earnings and More newsletter in October, indicating that Catlin and Williams had left the company. Later, a newsletter by the research firm Eilers & Krejcik's Gaming (EKG) reported on Sands' move to pull out of the online gaming industry scene and how it would affect companies they were in partnership with. Chris Krafcik, an EKG analyst, was quoted in the research firm’s newsletter saying:

Quote

"Sources said multiple signed term sheets were pulled. One startup was courting investment from multiple investors but told them Sands was taking the entire round. Months later, when Sands pulled the term sheet, none of the previously interested parties were willing to put in any money, and the business was left high and dry."

Other Companies Struggling to Stay Afloat in the iGaming Seas

Like LVS, Wynn Resorts joined the online gambling space late after a change of guard. In the last year and a half, Wynn Resorts has been trying to catch up to other betting companies through its online sportsbook brand WynnBET. Additionally, Wynn Resorts has made several attempts at spinning off Wynn Interactive over the same period.

For example, in May 2021, Wynn Resorts announced plans to merge Wynn Interactive with a special purpose acquisition company Austerlitz Acquisition Corporation. However, six months after the merger announcement, WynnBET reported a nine-figure loss in quarter 2 of 2021, and Austerlitz and WynnBET called off the merger. Had the merger gone through, Wynn Resorts' online arm would have been valued at more than $3 billion after it went public.

When the SPAC deal fell through the cracks, Morgan Stanley valued WynnBET at $700 million and forecasted its North American market share stood at 2.5%. Come January 2022, and the New York Post reported that Wynn Resorts was looking to sell Wynn Interactive at a further discounted amount of $500 million.

Although a late entry into the game hindered Wynn Resorts and Las Vegas Sands' entry into the online market, several other companies are struggling if DraftKings Q3 reports are to go by. The number of unique paying customers DraftKings reported was 1.6 million against an estimated 2 million customers, and it is estimated that it will report a massive full-year loss.

Las Vegas Sands Holding Tight on Asian Gaming

Las Vegas Sands no longer has investments in the US gambling sector. The company divested Las Vegas Resorts, the Palazzo, and Venetian Las Vegas, to Vici Properties, a New York-based real estate investment trust, for $6.25 billion in February.

LVS is now focused on its physical casino operations in Macau and Singapore. However, the move might be strategic if the Asian gambling market revenue is back to its pre-covid levels.

Between January and September 2021, the net revenue the company reported for Macau stood at $2.25 billion, and the profit recorded was $264 million. In comparison, the net revenue in Macau dropped to $1.18 billion, with a loss of $273 million over the same period this year. Looking at the first nine months of 2021 to 2022, in Singapore, Sands reported a rise in net revenue from $1 billion to $1.83 billion. Likewise, profits jumped from $271 million to $783 million.

Although LVS has taken a step back from the iGaming space, the company is yet to announce the sale of its iGaming investments. Therefore, there is still a possibility it could make a comeback in the future. Nonetheless, according to Krafcik, while Sands’ iGaming exit hasn’t impacted current investments, there are talks that the company may find a third-party buyer for its digital assets.