- Adelson Buys Mavs in Effort to Unlock Multi-Billion Dollar Casino Opportunity
Adelson Buys Mavs in Effort to Unlock Multi-Billion Dollar Casino Opportunity
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Adelson Buys Mavs in Effort to Unlock Multi-Billion Dollar Casino Opportunity
Dallas Mavericks owner Mark Cuban recently announced he is selling a majority stake in the NBA franchise to Miriam Adelson and Patrick Dumont. The transaction values the club at $3.5 billion.
Cuban’s track record of selling high (see: 1999 sale of Broadcast.com just prior to the dotcom bubble bursting) has sports industry observers suggesting team valuations have peaked or are close to doing so. The theory is the tech mogul does not like how the media rights landscape is evolving, particularly at a local level, and is exiting before it begins to alter sale prices.
And perhaps there is some truth to that.
But gaming industry insiders believe the transaction has more to do with Adelson and Dumont’s interest in unlocking a multi-billion casino resort opportunity within the state of Texas, and Cuban’s desire to participate in it.
Adelson is Las Vegas Sands’ (NYSE: LVS) largest shareholder. Dumont is its president and COO, and Adelson’s son-in-law. LVS is the largest publicly traded casino company in North America (though, it recently sold its Las Vegas properties).
Cuban has “made several comments in the past about [casino gaming] and Las Vegas Sands has been lobbying in Texas for multiple sessions and is putting a lot of money, millions of dollars, towards [its legalization] effort,” David VanEgmond (a former FanDuel executive and the current CEO of Bettor Capital) said. “So, this seems like [part of] a 10-year game where [LVS] is going to put in a new stadium and continue lobbying and investing in the state to try and ultimately get what [it] wants.”
The MFFL declined to comment on the speculation.
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The uncertain media rights environment is undoubtedly disconcerting to some NBA owners. The Mavs existing ~$50 million/year local rights deal with Diamond Sports Group will end at the completion of the ’23-’24 season.
But the anticipated haircut in local rights fees is unlikely behind Cuban’s decision to sell the team. In fact, there are several tells that suggest more exists to this transaction than meets the eye.
“When the Indiana Pacers are the same value as [and] the Phoenix Suns are worth considerably more than the Dallas Mavericks, that doesn’t make sense given their [respective] populations and market size,” VanEgmond said.
The $3.5 billion valuation awarded to the club also doesn’t make sense in the context of timing.
For the last ~20 years, control transactions have only gone in one direction (up). And Mat Ishbia bought the Suns last December for an NBA record $4 billion.
“Even if they were sold [later that] same day, the Mavericks should have sold for more,” VanEgmond said.
The unique deal structure also suggests there may be broader alignment between buyer and seller. Cuban will retain control over the club’s day-to-day operations.
“[The Adelson family may not] care about running the team because winning championships is not their goal,” VanEgmond said. “They care about building an integrated casino resort in Dallas, Texas, one of the biggest markets in the U.S., [population wise], that could open up for casino gambling.”
LVS has been actively lobbying within the state. It spent $6 million dollars on legislative efforts last year. Logic suggests Adelson and Dumont taking ownership of a high-profile local sports team will give it some additional influence/sway amongst lawmakers.
The company needs it. Sports betting and casino gaming have been unable to gain legislative approval in Texas.
But that hasn’t stopped sports teams in the state from cashing in on PASPA’s abolition. Back in 2020-2021 –at the height of sports betting expansion/marketing fever– the bulk of Texas’ pro clubs signed partnership deals with operators intending to plant their flag in the state.
The expectation was (and remains) if/when sports betting legislation is passed, the teams will control the licenses. Remember, there is no established gaming commission in the Lone Star State.
One team was conspicuously absent from the gold rush–the Dallas Mavericks. Its decision to pass is, in hindsight, arguably the greatest tell.
“You don’t turn down free money in the sports business,” VanEgmond said.
The sports betting insider suggested the Mavs may have left as much as $10 million on the table.
“You started to hear through the grapevine, because Las Vegas Sands did this major lobbying push around casinos in Texas, that Cuban was aligning with them and [was] focused on bringing casinos to [the state]. He thought that could impact him and the Mavericks much more than sports betting.”
LVS has been a vocal opponent of online gambling (online sports betting falls into the category). One can assume it would not have wanted a future partner in a land-based casino venture embracing OSB in the state, at least not before brick-and-mortar gaming became regulated.
Texas legislators introduced online sports betting and casino gaming bills for the first time in ‘21. Neither progressed particularly far.
The bills were on the docket again this year. Sports betting had more support than casino gaming, but neither passed.
The Texas Legislature won’t meet again until ’25 and doubts exist that either bill will pass at that time; they may not even make it onto the agenda. The Lieutenant Governor, who controls the agenda on the Senate side, reportedly opposes licensure. It remains TBD if he can be convinced that the bills should at least get a vote to move forward.
A lot of money is at stake for those supporting legislation.
How much are we talking?
“Hundreds of millions of dollars,” VanEgmond said. “In a good scenario, [an integrated resort casino in Dallas] could be making $500+ million of EBITDA every year.”
For context, high-end Nevada casinos will generate north of $500 million dollars in EBITDA annually.
Online sports betting, by comparison, has much lower ceiling.
“You’re probably talking around $500 million worth of total online sports betting profit for the whole state [of Texas] across 10+ companies,” VanEgmond said.
To be clear, the Mavs do not have a casino license. Adelson and Dumont are betting they, along with Cuban, will be able to influence local hearts and minds.
So, their $3.5 billion purchase of the team may seem risky.
In reality, NBA ownership is likely a low-risk high-reward endeavor for them.
Even if legalization never becomes reality, “it’s not like the [Mavs are] going to depreciate,” VanEgmond said.
Unless, of course, Cuban did in fact sell at the top (which would have been by accident).
The more likely scenario is the Adelson family “gets in there, they start investing more in the team. In the next decade they break ground on this massive new arena complex that they [will] privately fund, if they can get a casino at that time or in the not too distant future,” VanEgmond said.
And the odds of casino legislation getting passed in Texas in ’29 or ’31?
The Bettor Capital executive put them at -110 (or ~50%).
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