$1.3 Billion Sale Of Sands Bethlehem To MGM An All-Around Win For Everyone

March 16, 2017

The news is not quite official, but sources say MGM Resorts International is buying Sands Bethlehem Casino. The rumored price tag of the biggest sale in Pennsylvania casino history is $1.3 billion.

MGM aggressively expanding East Coast presence

The acquisition is the latest in a series of moves by MGM to establish a presence on the East Coast. Last December the company opened MGM National Harbor in Maryland.

In 2016 MGM acquired Borgata Resort and Casino in Atlantic City. The company is  building a casino resort in Springfield, MA. That project is scheduled to open in the spring of 2018.

Conversely, Las Vegas Sands Corporation is known for grand high-end resorts in major travel destinations like Macau and the Las Vegas Strip. The Sands Bethlehem property is the lone local casino in the company’s portfolio.

Adelson has reasons to exit Pennsylvania

The sale makes sense for both parties and Sands CEO Sheldon Adelson has other reasons to exit the Pennsylvania gambling market.  The state is strongly considering online casino expansion. Adelson is a notorious opponent of internet gambling.

Sands Bethlehem is one of the top-performing casinos in the state. Selling the valuable asset to a group like MGM, who is looking to get into the online casino industry, is a profitable way to get out before Pennsylvania online casino expansion occurs.

The Bethlehem casino is also home to first group to successfully unionize within the Sands organization. The security guards there recently won a lengthy battle to organize.

Rather than try to accommodate a union and open the door to more labor organization, a sale could nip the problem in the bud. The current labor contract stipulates a new owner is not beholden to honor the agreement.

Sale is a win for the Lehigh Valley area

The exit of Sands Corporation from Pennsylvania potentially solves some economic problems on the local level.

In the fall of 2016 the state court ruled the $10 million annual host fee imposed on casinos was unconstitutional. Since smaller and larger casinos had to pay the same amount, the court concluded the state was unfairly charging different rates for different properties.

Several casinos agreed to keep paying the fee to their respective local governments. Sands Bethlehem is not paying the fee and is waiting to see what a new tax system stipulates it owes.

Local officials are hopeful a change in ownership could renew a commitment to the community.

“We’ve considered Sands a good corporate citizen, but this sale could be a good opportunity,” Bethlehem Mayor Robert Donchez told the Allentown Morning Call. “There has been some frustration in getting Sands 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.”

The change in ownership could also help sway the votes in favor of Pennsylvania online gambling. State Sen. Pat Browne said he is willing to change his stance on the issue if Adelson is gone.

“I know I would consider changing my opinion if a new player arrives on the scene with a different view of it. If MGM is the buyer, I’d like to know where they stand before I consider new legislation,” he said.

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