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Best of Howard Stutz
Howard Stutz
 

Pennsylvania helps lift Las Vegas Sands

24 January 2011

LAS VEGAS, Nevada -- Investors and Wall Street have taken notice of the results coming from the casino in Bethlehem, Pa., owned by Las Vegas Sands Corp.

The addition of table games in July fueled Sands Bethlehem to a 101 percent increase in gaming revenue in 2010. The expected opening in May of a 300-room hotel tower will keep the casino in the upper tier of the state's 10 gambling halls.

In the grand scheme of Las Vegas Sands, Bethlehem is an afterthought.

More than 80 percent of the company's total revenue comes from its casinos in Macau and Singapore. In the third quarter, that figure was more than $1.5 billion.

Sands Bethlehem revenues were $82.8 million in the quarter, 4 percent of the company's total.

Pennsylvania, however, is a bigger picture for the industry. The state's casinos collected gaming revenue of almost $2.5 billion in 2010, an increase of 26.6 percent over 2009. The results included just six months of table games and less than four months of operation by the SugarHouse Casino in Philadelphia.

Pennsylvania has 26,907 slot machines and 783 table games.

Wells Fargo Securities gaming analyst Carlo Santarelli said Pennsylvania has a way to go to catch Atlantic City, the nation's No. 2 gaming market behind Las Vegas.

Pennsylvania casinos could soon be averaging annual gaming revenues of roughly $2.85 billion. Atlantic City is running at a pace of $3.6 billion in yearly revenues.

"It's still a comfortable margin, but certainly shrinking," Santarelli said.

More problematic for Atlantic City would be a second casino in Philadelphia and the expected opening of a slot machine casino at the Aqueduct Race Track in New York.

Sands Bethlehem is part of that troublesome mix.

The property, which opened in 2009 at the historic Bethlehem Steel Mill, is 90 minutes from New York City. In 2010, Sands Bethlehem had revenues of $286.1 million, blowing the cover off analysts' projections.

With the hotel opening and plans in the works for retail, meeting space and more restaurants, Las Vegas Sands is confident the property will become a larger part of the company's earnings.

Some analysts think Las Vegas Sands will see revenues of $2.4 billion from Macau and $2.7 billion from Singapore this year.

Bethlehem? The casino could collect possibly $315 million in revenues in 2011, which is still good news to state gaming regulator Kevin O'Toole.

"For the fourth year in a row Pennsylvania saw an increase in revenue from legalized casino gaming," he said. "And, with the popularity of table games, tax revenue should continue to grow throughout 2011."