The Spanish capital, the country's largest city, emerged as the company's best choice for the development, Las Vegas Sands Chairman and CEO Sheldon Adelson said in a statement released late Friday in Las Vegas.
"The regional government of Madrid has been a strong advocate for this potential development, and we are appreciative of the energy they have brought to this process," Adelson said.
"Barcelona is an outstanding tourism destination, and choosing Madrid over Barcelona was not an easy selection," he said.
The decision was highly anticipated in Spain, where a high jobless rate and a shrinking economy make the prospect of thousands of construction and service jobs attractive to project supporters. But critics predict that gambling will attract criminals and say positions as hotel maids, waiters and blackjack dealers aren't a recipe for success for young people badly in need of jobs.
Adelson has said he wants to invest about $22 billion in the project. The company statement made it clear Las Vegas Sands will allocate no more than 35 percent of that amount.
Adelson has also said he wants Spanish laws changed to let gamblers smoke inside the casinos and new zoning regulations allowing him to send buildings soaring above the skyline.
Company officials called picking a location an important first step toward building a project that is expected to be built in phases over about 10 years. Plans have called for six casinos, 12 hotels featuring 36,000 rooms, a convention center, three golf courses, shopping centers, bars and restaurants.
But not everyone is thrilled about the idea of Spain hosting a European Sin City that could attract prostitution and mafia gangs — and add gambling addiction to the woes of already desperate Spaniards.
Las Vegas Sands Corp. surpassed Caesars Entertainment Corp. last year as the world's largest casino corporation, posting profits of $1.27 billion in 2011. It owns the Venetian and Palazzo resort casinos on the Las Vegas Strip and the Marina Bay Sands in Singapore.
Through its majority-owned subsidiary Sands China Ltd., the company also owns the Venetian Macao and Sands Macao casino resorts, the Plaza Macao hotel, restaurant and shopping complex, and the Sands Cotai Central resort with three hotels and two casinos.
The company's entry into the casino market in the former Portuguese colony near Hong Kong spawned legal battles in Macau and Las Vegas.
A Hong Kong businessman won a $43.8 million verdict in a civil lawsuit filed in Nevada in 2004 claiming he was denied a $5 million "success fee" and 2 percent of net casino profits for helping the company win its Macau gambling license. The Nevada Supreme Court in 2010 ordered a retrial. That case is pending.
A bruising lawsuit filed in 2010 by Sands Macau's former top executive, Steven Jacobs, has drawn interest in the company from U.S. Justice Department and Securities and Exchange Commission investigators for possible violation of the Foreign Corrupt Practices Act. The law bars U.S. companies from paying foreign officials to "affect or influence any act or decision" for commercial benefit.
Jacobs accuses the company and Adelson of breach of contract and of pushing him into illegal activity in Macau. Adelson and the company deny wrongdoing and are vigorously defending the case. No charges have been filed.
Adelson also is a prominent philanthropist and political donor to U.S. Jewish and Republican causes and candidates. He gave $10 million in support of former presidential hopeful Newt Gingrich during his bid for the GOP nomination and has pledged $100 million to Mitt Romney's GOP campaign for the White House.
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