Spain's Deputy Prime Minister, Soraya Saenz de Santamaria, said the company had made late demands for legal and financial guarantees that "did not comply with Spanish law or that of the European Union."
She said the demands included tax benefits, financial compensation in the event of any future law change that could affect the project, and an assurance that new operators would be not be allowed in the sector.
Initially, Adelson had also assessed Barcelona, on the Mediterranean coast, as a possible location for EuroVegas before opting for Madrid. One obstacle had been that Las Vegas Sands would fund only 35 percent of the complex. Other investors were supposed to make up the rest.
With Spain's economy immersed in a deep financial crisis and a two-year recession, some analysts said raising capital for 65 percent of EuroVegas was going to be difficult. Banks are mainly focused on coping with losses from failed construction projects, not embarking on ambitious new investments.
The planned multibillion-dollar project was due to have been built in wasteland on the edge of the relatively colorless suburb of Alcorcon, 17 kilometers (10.5 miles) to the southwest of downtown Madrid.
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Associated Press writer Ciaran Giles contributed to this report.
