While there have been public “non-confirmation” confirmations that a sale of Las Vegas Sands Corp’s Sands Bethlehem Casino to MGM Resorts International is imminent, experts caution that such a transaction will not happen overnight, and after it comes before regulators, could take several months for approval.
Local WFMZ.com spoke to several regional and international experts on the matter. Their report paints a picture with details of the process that may happen when the world’s two largest gaming firms (by revenue) presumably try to transfer a property in a state with a gaming control board that employs some 300 people – but the same brush strokes could be used to paint any number of images to one degree or another, for any sized casino sale, in nearly any regulated market.
Unlike conveying a simple piece of real estate, even one where potentially billions of dollars would cross the table, selling a casino is a complicated matter due to sometimes labyrinthine regulations in place to keep the industry clean of shady influences and to protect the buyer, seller, state, and the end consumer. The report also points out that the Sands/MGM transaction has not officially entered the public sphere yet as there has been nothing filed with the Pennsylvania Gaming Control Board. The parties are in private negotiations that have become public.
Experts we have consulted independent of the report tell us that six to seven months from identifying a property to closing a casino deal would be a streamlined sale in almost any locale – while special regulations and conditions in a heavily regulated jurisdiction such as Las Vegas or Macau, along with corporate considerations for larger properties, could easily double or even triple that time frame depending on the entities involved.
Of the 300 or so employees of the Pennsylvania Gaming Control Board, more than a third are staffed at the state’s 12 casinos as compliance agents. Doug Harbach, speaking for the regulator told WFMZ.com, “In a nutshell, it is our job to ensure the integrity of gaming in the commonwealth.
“We want to make sure the facilities are financially sound because of the partnership these casinos have with the commonwealth. We want to make sure these facilities are safe for the patrons. And we want to make sure the games are fair,” said the Communications Director.
Included in the board’s role are intricate and labor intensive procedures surrounding proposed casino sales. Another expert the outlet consulted was Alan Silver, a former casino executive and current Assistant Professor at Ohio University. He noted that even though this potential transaction would be between two strong casino companies that are well-known to regulators, MGM will still “have to go through the time period, the hoops, the procedures the gaming commission has in line,” said the professor. “There’s no shortcuts.”
In 2015 Las Vegas Sands reported gross gaming revenues of about $11.69 billion with MGM taking in $9.2 billion. Both companies are involved in complicated world market strategies with MGM about to open a $3.1 billion hotel-casino in Cotai later this year and expanding their non-gaming footprint into 5-star hotels in mainland China, Dubai, and elsewhere. About a year ago they successfully created a real estate investment trust, MGM Growth Properties LLC, that owns most the properties and leases them back to the MGM casino operating company. In the meantime, Sands opened the $2.7 billion Parisian Macao in September and is exploring emerging markets with a desire to commit up to $10 billion to secure a gaming license in Japan, as well as further expansions and asset reclamations elsewhere, including plans to sell 49% of its The Shoppes At Marina Bay Sands for up to $3.5 billion.
Having come this far without absolute denials from both companies about the veracity of reports on a potential sale occurring, it may be safe to assume it will proceed. If so, once the unknowable time period of negotiations, dotting i’s and crossing t’s, and filing with the state is completed the rest of the process could play out thusly:
The state would receive a petition for change of control and an extensive investigation into MGM, who currently own no casinos in the state, would begin. Although already vetted by regulators in Nevada, New Jersey, Macau, and several other jurisdictions, investigators would take a fresh look at other MGM operated properties, financial records, labor practices, and do background checks on some employees including face to face interviews in Pennsylvania and possibly abroad. Board members, executives, and the nominated operations team for the casino would also face background checks.
Not all of this would be done in a vacuum according to the Gaming Control Board’s spokesperson who told the news outlet that the board does coordinate with other states and that all seven of the board members are well qualified to execute the tasks and were hired for their skills, with some coming from backgrounds like the FBI or Secret Service.
After being approved, MGM will need to pay a multi-million dollar transfer fee to get the gaming license, which may or may not include some special provisions such as table allocations that Sands was able to achieve above and beyond the original legislation authorizing Pennsylvania casinos.
Regardless of the size of the transaction, each jurisdiction has its own policies, procedures, and regulations to accept or reject a potential casino sale. Transferring or obtaining a license in a U.S. state with a low population and several small electronic casinos, or the acquisition of a Caribbean hotel and casino can go smoothly and quickly. The other extremes; Las Vegas, Atlantic City, or Macau each present their own sets of complications and require patience, persistence, perseverance, and in most cases, very deep pockets. Both companies are quite capable of meeting Pennsylvania’s regulatory requirements, the only question that seems to remain now is, how long will it take before you can trade your My Sands card for MLife rewards. But, of course, negotiations could break down, although it seems unlikely at this point.