Don’t Expect Sands Bethlehem to Become MGM Any Time Soon

Jessica Welman March 31, 2017
There is no indication the sale of Sands Bethlehem Casino Resort to MGM Resorts is not going to go through. There are several reasons why it is going to take quite a while for any major changes to take place though.

A report from WFMZ News in Pennsylvania details just how complicated casino sales can be. With vetting from Pennsylvania Gaming Control Board (PGCB), transfer of gaming license, and finalizing the sale, this is a process that will take months, not weeks.

Sale of Sands casino to MGM is not even finalized yet

Rumors of a $1.3 billion Sands sale have been swirling for a month. However, neither company announced or confirmed anything about the property.

Reports say the sale is imminent, but there are several elements which do need to be negotiated and discussed before the two companies could reach a deal.

For example, Sands Bethlehem announced a $90 million expansion project last November. Will MGM agree to follow through on expansion?

Will MGM voluntarily pay $10 PA casino host fee?

How MGM will handle the expansion is just one thing the PCGB will be interested in hearing about before approving a potential sale. Another point of interest is whether or not MGM will voluntarily pay the $10 million annual regulatory fee to the state.

Up until last year, each of the 12 Pennsylvania casinos was required to pay a $10 million annual host fee. State courts ruled the tax unconstitutional last fall though.

Since then, several casinos voluntarily agreed to keep paying the fee to support the local government. Notably, Sands Bethlehem did not. The casino’s refusal to voluntarily pay the fee led the District Attorney for the Bethlehem area to threaten to not pursue criminal cases negatively affecting the property.

PGCB will need to do extensive vetting for MGM

PGCB Communications Director Doug Harbach explained how the process will work once Sands and MGM Resorts petition for a change of casino ownership.

Even though MGM Resorts is one of the bigger casino companies in the world, the company is new to Pennsylvania gaming, so it would be starting from ground zero. Harbach explained the goal of the process:

“In a nutshell, it is our job to ensure the integrity of gaming in the commonwealth. We want to make sure the facilities are financially sound because of the partnership these casinos have with the commonwealth. We want to make sure these facilities are safe for the patrons. And we want to make sure the games are fair.”

The specific of that include:

  • Background checks of executives
  • Financial auditing
  • Looking into diversity and hiring practices
  • Face-to-face meetings with casino operators

The casino industry pays for this extensive vetting process, no tax dollars go towards funding it. MGM will also need to pay a $2.5 million fee to transfer the license.

Harbach said this process can easily take six months. Considering the sale has not been announced yet, this means there is quite a wait before MGM gets into Pennsylvania.

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