Las Vegas Sands Corp. (LVS) reported $2.8 billion in revenue for the first quarter of 2025. The revenue was down 3.3 percent from the first quarter of 2024. EBITDA was $1.1 billion as compared to $1.2 billion in 2024. For the quarter, net income dropped from $583 million to $408 million. LVS has properties in two jurisdictions, Macau and Singapore. The Singapore operations are going gangbusters, while Macau is struggling. Sands management says not to worry, Macau will get better.
The operations in Macau have to get better. Sands has no other options at the moment. In 2021 in the wake of COVID, LVS sold its Las Vegas holdings to Apollo Global Management and Vici Properties for $6.3 billion. In the blink of an eye, Las Vegas Sands ceased to be a Las Vegas anything; now it is just plain old Sands, LVS, or Sands China to investors.
At the time, the escape from Las Vegas seemed to make sense. Las Vegas was struggling in the aftermath of the pandemic. At the same time, the future in Asia seemed very bright. How could one go wrong with 1.4 billion Chinese as potential customers? The company said, “Our long-held strategy of reinvesting in our Asian operations and returning capital to our shareholders will be enhanced through this transaction.” The company also said it viewed digital gaming as a developing opportunity.
Las Vegas has recovered and is doing quite well, thank you. The Strip has set records year after year since the Sands divorce, while Macau has not yet reached the revenue levels of 2019. To make matters worse, the Chinese economy is uncertain. In Macau, regulators want casino operators to spend more money on non-gaming amenities. Thus, even with less GGR, the capital expenses are going up.
LVS maintains an optimistic attitude toward Macau and outright enthusiasm for Singapore. Sands once planned a $10 billion resort in Japan, but has since thrown in the towel.
Even as it was said that its future was in Asia, LVS was casting an eye on the United States. Texas and New York City offered potential opportunities of revenues and profits on the level of Asia. Each has played out on different timelines, but Sands was forced to give up on Texas, at least for the current legislative session. The legislation might come back, but the probabilities of successful gaming legislation are Texas are always low, really low.
New York City is very attractive, but the process has been slow. Sands and other bidders have been on the ground lobbying for several years. About 11 bidders are making their cases for one of three licenses the state will issue. The process is supposed to wind up this year, then the successful bidders can begin to build. It is unlikely that a Big Apple casino will open before 2029 or 2030. Still, it might be worth the wait. However, Sands has decided not to wait. After announcing its earnings, the company declared it was dropping its bid for a casino in the Long Island suburbs just outside New York City. LVS hopes to sell the option to another operator.
In making the announcement, LVS President Patrick Dumont said, “We strongly believe in the development opportunity for a land-based downstate casino license in New York. We also continue to believe that the Nassau Coliseum site is the best location for that development opportunity and should be highly competitive in the New York casino licensing process. However, as we previously stated, the company remains concerned about the potential impact on the legalization of igaming on the overall market opportunity and project returns.”
It is strange that a company that stated four years ago it saw its future in Asian and digital gaming now fears digital gaming’s impact on conventional casinos. The heir to Sheldon Adelson’s role with the Sands, Chairman and CEO Robert Goldstein, has said several times in the last year that he considers igaming a threat in New York. Mobile sports wagering has been a phenomenal success in the Empire State, attracting billions of dollars in wagers per month and paying nearly $100 million a month to the state in taxes. It makes perfect sense for New York to seize the opportunity and authorize mobile casino gambling.
New York state stands to gain a great deal from igaming. The state tax rate is 50 percent. Big bucks are in the forecast for the Empire State with igaming. On the other hand, for an operator, it is difficult to justify an investment approaching $10 billion with igaming on the horizon. If New York passes igaming legislation, the casinos will pay a price, just as they have in New Jersey, Pennsylvania, and Michigan. And if you do not have any skin in that game, why put any in now with that lurking?
Which brings us full circle to the first quarter 2025 earnings report and the 2021 sale of the Las Vegas assets. Sands has all of its eggs in one basket, well, two really. One basket is fine, the other not so. The situation is fluid and ever changing. The risks in Asia are new competition, the Chinese economy, and the international situation. Those situations are fluid and far from certain. Even robust Singapore may suffer from new competition coming in time from Japan and Thailand. Any severe disruption of the Chinese economy will affect the entire region, as would a war in trade or conventional weapons. A Sands casino on the famous Strip might be a good way to hedge its bet.
