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Sands Casino Bethlehem will reportedly be sold in the largest real-estate transaction in Lehigh Valley history. And it takes a company out of the mix in Pennsylvania that has been historically opposed to online gambling.
Wind Creek Hospitality has agreed to purchase the PA casino for a total enterprise value of $1.3 billion. The Las Vegas Sands Corp. issued a press release breaking the news on Thursday morning.
It’s the fourth out of the state’s 12 casinos to change hands in recent months.
Wind Creek is an affiliate of the Poarch Band of Creek Indians of Alabama, which owns several small casinos and horse tracks. The deal should be finalized in nine to 12 months, according to a report from The Morning Call. It will be pending approval of the PA Gaming Control Board, as well.
The 159,000-square-foot casino sits on 127 acres of land along the Lehigh River, just outside of Allentown. It was opened in 2009 at a cost of $800 million.
Sands Bethlehem has since become one of Pennsylvania’s most successful casinos. It generated about $540 million in gaming revenue during the last fiscal year, second in the state behind Parx Casino. The gaming floor includes more than 3,000 machines, 235 tables, a poker room, an event center and an attached hotel.
The purchase represents a big step up for Wind Creek. While the property was one of the smallest in Las Vegas Sands’ portfolio, it is by far the largest in Wind Creek’s.
Stephanie Bryan, Wind Creek’s CEO, offered this statement on Thursday:
The addition of this fantastic team and property to our portfolio furthers our desire to secure a long and prosperous future for our tribe. We look forward to working with our new team members and the community to cement Wind Creek Bethlehem’s position as the premier entertainment destination in the Northeast.
It has big shoes to fill, too. The community embraced Sands as something of a white knight after breathing new life into the former Bethlehem Steel site. The casino currently employs about 2,500 people.
Don Cunningham, CEO of the Lehigh Valley Economic Development Corporation, hopes the new buyers will develop some of the other land around the casino:
We hate to see the Sands go because they have been a first-rate operator and good community partner, and there is always some level of fear of the unknown. But we are hopeful with the sale there is an opportunity to not have the remaining lands and properties sit dormant.
Pennsylvania legalized online gambling last year, and the industry will likely roll out in 2018. Casino operators have started to jockey for position, cobbling together software partnerships in preparation for launch.
Las Vegas Sands is owned by Sheldon Adelson, who is arguably the world’s largest opponent of online gambling. He and his bottomless pockets lobbied against the state’s efforts to legalize it for the duration of the process.
It wasn’t clear if Sands Bethlehem would be an active participant in online casinos or if it would begrudgingly have to join the market. The sale takes that out of the equation, although Sands may purchase online casino licenses as a placeholder for Wind Creek.
At this point, it’s really too early to tell what Wind Creek’s plans are. Spending $1.3 billion on a Pennsylvania casino is a pretty surprising step by itself, for starters. Any future developments, including online gambling, would be less of a surprise than that. But would anyone enter the PA casino market without designs on the online casino potential in tandem?
Wind Creek’s Alabama properties don’t even offer table games, so that’s already a significant endeavor to bite off. Some have already begun to speculate on whether or not the tribe has the resources to manage such a large property so far from home.
The group has no known relationship with an online gambling platform, nor an in-house team of developers for such a product. It has no brand presence in the region, either.
What it does have, apparently, is capital. Its operations in Alabama are tax-free in the state, which has allowed Wind Creek to build a significant bankroll.
Given the timing of its entry into Pennsylvania, it’s at least possible Wind Creek has an eye toward online gambling.
PA sports betting could also be on the way, making Wind Creek a possible player in that market, as well.
Tribes are not always on the same page when it comes to sports wagering. But some of the larger tribes — like the Poarch Band — appear to be in favor of it, should the Supreme Court strike down the federal ban. Bryan commented on the issue briefly in 2017.
Like the prospect of online gambling, it’s hard to see someone buying a casino in PA without an eye toward the potential future of sports betting.
Rumors that Sands has been shopping the property around have persisted for several years. The boss is adamantly opposed to online gambling, and the impending launch makes Pennsylvania a sellers’ market for casino owners.
Sands’ focus is elsewhere, anyhow. Although the Bethlehem property is overwhelmingly successful by Pennsylvania standards, its revenue is a relatively small drop in Sands’ bucket. It owns ten other properties in Las Vegas and China which are the real cash cows of the empire. The company generates close to $15 billion in annual revenue.
Sands was recently involved in the bidding process for Pennsylvania’s new mini casino licenses, but its proposal was rejected due to location. Now, it appears the group is ducking out of the state altogether.
“Sands Executive Vice President and Chief Financial Officer Patrick Dumont said the company would likely use the sale proceeds in a manner consistent with its long-held strategic direction,” according to The Morning Call.
That “strategic direction” does not appear to include Pennsylvania going forward.
If you’re counting, a third of the state’s casinos have changed hands in recent months: