Casino mogul Adelson pressures Spain to bend rules for EuroVegas
American casino mogul Sheldon Adelson's EuroVegas project could bring Spain much-needed investment, but the deal comes with demands for unappealing legal and financial exemptions.
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Worried about 'the worst of Vegas'
Adelson first announced he was in talks for a EuroVegas in Spain more than a year ago, but with Spain focused on its economic crisis, growing unrest, and political upheaval, negotiations didn’t get very far.Skip to next paragraph
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Unemployment now stands at more than 23 percent and is expected to peak at 25 percent. The economy is projected to contract 1.5 percent in 2012 and not return to growth until 2014. Austerity measures have been severe and are expected to only get worse.
Mega casino proposals are not new to Spain, which receives nearly 60 million foreign tourists every year. At least another couple of mega casino projects have been announced in Spain over the past years, including one that attracted millions in investment, but the plans fell through as the crisis scared investors away.
Interest in Adelson’s EuroVegas picked up once the conservative Popular Party swept elections in November 2011. Adelson met with top regional officials to discuss his project as recently as February 2012.
But concerns about gambling, prostitution, money laundering, and other stigmas of the casino industry are not new either and Spain, like the rest of Europe, has strict anti-gambling laws although casinos are legal and numerous.
“Spain should impose conditions. They have to attract higher value-added tourists,” says Gayle Allard, a managerial economic professor at IE Business School in Madrid. “Make sure EuroVegas doens’t look like the worst of Vegas.”
Opposition against the project has also been building as officials admitted in the past two weeks to be involved in advanced negotiations, despite getting close to no public input. Spain is in dire need of investment and job creation – but at what price, many ask.
“They are keeping negotiations secret. They never asked anyone’s opinion. Even after we asked, they haven’t told us anything,” says María Fernández, a spokeswoman of the EuroVegas No! initiative. She was one of a dozen protesters delivered a letter Wednesday to Madrid officials demanding the project be scrapped.
“I believe Adelson really wants to build EuroVegas, but this can unwind at any moment,” Dr. Sala i Martín says. “He’s asking for exceptionality that shouldn’t be granted. But if the government’s desperation is such that it will bend laws for him, than yes, this could actually happen.”
Perpetuating a broken economic model
The bulk of Aldelson’s job-creation proposal would be in the construction and tourism sector, mostly as low-income jobs – precisely the kind of economic model that led Spain to the economic pain it’s now enduring.
When a real estate bubble burst in 2008, leaving millions of workers without a job, the economy simply couldn’t absorb the suddenly unemployed workforce without a substitute industry.
Critics say Adelson’s proposal reinforces an unsustainable economic model and adds insult to injury because it includes a request for tax and social security exemptions.
“Jobs and investment are not worth what they want in return,” Ms. Fernández says as she passes out flyers in Madrid's main plaza, Puerta del Sol. Could she be persuaded with more information though? “No. This is not the economic model we need. We don’t want a Sin City here. We don’t want Adelson’s money here. The entire project is intolerable.”
But some economists disagree. “You have to be realistic. In the short term, what do you do?” asks Dr. Allard. “Spain should grab anything to create jobs. If you can get someone to come in, while economy gets back on its feet, it’s a fiscal stimulus in itself.
“Besides,” Allard adds, “nobody is going to come and say they’ll hire 300,000 to build high technology industries.”