Las Vegas Sands Sells the Sands Casino Resort Bethlehem to MGM Resorts International

MGM Resorts Buys Sands Bethlehem

The Sands Bethlehem purchase gives MGM Resorts a fourth major east coast casino.

The Las Vegas Sands Corporation has reached a deal with MGM Resorts International to sell the Sands Casino Resort Bethlehem for approximately $1.3 billion. The deal might take several more weeks to finalize, because MGM Resorts continues to do its “due diligence”.

Even when the deal is signed, a full changeover might take up to 6 months to complete. The Pennsylvania Gaming Control Board must approve the sale, while a $2.5 million licensing fee must be paid. Licensing from a state agency often takes months, though MGM Resorts is a known quantity with licenses in Nevada, New Jersey, Maryland, and Massachusetts.

Mark Juliano Announced the Sale

The sale has been anticipated for more than a week. Mark Juliano, the President of Sands Casino Resort Bethlehem, sent an email to the casino’s 2500+ employees last week to information them that LVS had entered into negotiations for the sale.

That email led to speculation over the next several days that the MGM Resorts would buy the casino for at least $1 billion. The uncertainty did not last long, as MGM Resorts CEO Jim Murren and Las Vegas Sands CEO Sheldon Adelson know one another well. The companies are two of the four giant American casino brands on the Las Vegas Strip, alongside Wynn Resorts and Caesars Entertainment.

Sands Bethlehem Gaming Machines and Tables

The Sands Bethlehem is the premier land-based casino in Pennsylvania. The venue attracts 9 million customers a year and is the largest revenue producing casino in the state. The Sands Bethlehem gaming space contains 3,013 gaming machines, 237 table games, 150 live dealer electronic baccarat and roulette machines, and a poker room.

The resort area contains 8 restaurants, a hotel with 300 rooms, convention space, a concert venue, and an outlet mall with top retail stores. With a customer base which includes the Philadelphia metropolitan area and a program that buses 50 busloads of New Yorkers every week to the venue, Sands Bethlehem is a revenue powerhouse.

Carlo Santerelli’s Comments

Carlo Santarelli of Deutsche Bank’s Game and Leisure Division said of the sale, “We believe a Sands Bethlehem sale, which would likely include MGM Growth Partners, could also be beneficial for all involved. For MGM Resorts International, the transaction would expand a north-east presence that has grown significantly over the past year while MGM Growth Partners potentially benefits from a new rent stream.

“Las Vegas Sands Corporation sheds an asset [that] has already produced a significant [return on invested capital] and strengthens the capital return potential story.

Robert Donchez on Bethlehem’s Development

Robert Donchez, the mayor of the city of Bethlehem, said the news could be good for his community. Mayor Donchez told The Morning Call, “We’ve considered Las Vegas Sands Corporation a good corporate citizen but this sale could be a good opportunity. There has been some frustration in getting Las Vegas Sands Corporation to put some focus on the rest of the property. The buyer might be more willing to consider developing it or at least selling it off to someone who will.

Sands Bethlehem has been a boon for Donchez’s city, employing thousands of residents and drawing billions in capital from around the state. The casino was one of the first developments planned after Pennsylvania legalized brick-and-mortar casinos in 2004. Sands Bethlehem opened in 2007 and became a revenue success, despite opening just shortly before the Global Recession.

MGM Resorts’ East Coast Properties

As Robert Donchez noted, the Las Vegas Sands Corporation never developed the property’s retail and attractions to their full potential. MGM Resorts International is developing a reputation on the East Coast for its integrated casino-resort developments, especially after the MGM National Harbor received rave reviews when it opened in December 2016. The property, which is 25 minutes from downtown Washington D.C., features art from some of the regions best artists and sculptors.

MGM Springfield in Western Massachusetts is set to open in 2018, but it already has developed a reputation for urban renewal. The casino-resort in Springfield is expected to be a centerpiece of the city’s redevelopment plan, and MGM Resorts plans to be a patron of the arts in the area. The MGM Springfield is going to contain a cooking school and a casino management training center.

In Atlantic City, MGM Resorts International’s Borgata is the most successful casino in the city. Though Atlantic City continues to struggle with the decline of its casino industry, Borgata generates over 40% of the gaming revenue on the Boardwalk.