News

August 23, 2009

Sands’ slot machines a gamble

MATT ASSAD The Morning Call

Even before the first dollar was pumped into slot machines at Sands Casino Resort Bethlehem in May, casino operators were saying they planned to wheel in 2,000 more slot machines in November.

Now that the casino has been open for nearly three months, there’s just one problem with that promise to expand: The existing 3,000 slot machines aren’t nearly busy enough.

Sands officials do not comment on casino revenues, but the numbers don’t lie. In July, Sands’ take per day was $211 per machine, according to revenues released by the Pennsylvania Gaming Control Board. Gaming experts say that number puts the casino closer to having too many machines than not enough.

Mohegan Sun at Pocono Downs reported that its 2,466 slots each won an average of $259 per day in July.

“In general, below $200 means you may want to look at whether you have too many machines,” said Joseph S. Weinert, senior vice president of New Jersey-based Spectrum Gaming Group, which follows gaming revenues nationwide. “About $250 to $300 is where you want to be, the sweet spot so to speak. And if you start getting to $350, you want to consider adding machines.”

When Sands opened its $743 million casino May 22, casino officials said they planned to add another 2,000 slot machines as early as Nov. 22. Under state gaming law, casinos can open with a maximum of 3,000 machines but can apply to increase to 5,000 after six months.

During the media tour before the opening, Sands Bethlehem President Robert DeSalvio proudly pointed to the massive, unused section of the casino floor where the new machines would be. Now, nearly halfway through that six-month period, the expansion in Bethlehem no longer sounds certain for November.

“We’re not backing away from the expansion, but a prudent company is constantly reviewing its situation with the idea of making changes to its plan, if necessary,” said Sands spokesman Ron Reese. “In this case, it’s prudent to take a wait-and-see approach. We may wait until October before making a decision.”

Reese noted more machines require more staff and that the company would not take on added expenses unless it is warranted.

DeSalvio said the casino still plans to apply for expansion, but no one at Sands is tossing around the 2,000 figure anymore.

“There’s a process to applying for expansion, and we intend to start that very soon,” DeSalvio said. “What has not been decided is how much we’ll ask for.”

Since its record-breaking opening day, Sands has settled in to being the fourth busiest casino in the state — behind two near Philadelphia and one near Pittsburgh — with revenues similar to those being garnered at the smaller Hollywood Casino near Harrisburg.

For July Pocono Downs came in fifth in revenue but its $19.8 million edged out Sands Bethlehem in gross terminal revenue, the amount of money a casino retains after deducting promotional plays and paying out jackpots.

Sands Chief Executive Officer Sheldon Adelson said he is not disappointed with revenues in Bethlehem. He argues that with continued marketing and the building of its customer database, the casino is on a path to become one of the state’s most successful. For example, it has embarked on a major advertising campaign in New York and New Jersey and is giving away more than $1 million in free play per week to get people to make repeat visits.

Experts like Weinert argue that it takes two to three years for a casino to build a client base and ramp up to its revenue potential.

Still, that doesn’t help Sands justify expanding this year. The state Gaming Control Board, over the past three years, has routinely approved applications for expansion. But to this point, they’ve been made by casinos that often have people waiting in line to play.

For example, the Meadows Casino outside Pittsburgh was given permission to expand in March from 1,800 machines to more than 3,700, but its machines were often pulling in more than $400 per day. Even now, after the expansion, its $257 daily take per machine last month was 22 percent higher than the Sands.

“It’s just one factor the board would consider, but it’s up to [board members] to decide how much revenues matter,” said gaming board spokesman Richard McGarvey. “On one hand they don’t want people standing in line to gamble, but on the other I don’t think they want a bunch of idle machines either.”

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