Las Vegas Sands Sale of Pennsylvania Casino Saves Company Millions of Dollars
Posted on: April 20, 2020, 12:51h.
Last updated on: April 20, 2020, 01:28h.
Las Vegas Sands completed its $1.3 billion sale of its former Pennsylvania casino resort in Bethlehem to Wind Creek Hospitality last May. Fast forward to today, and the transaction is proving to be a sound decision by the casino giant.
Few saw the coronavirus pandemic coming in 2019. With a roaring economy just several months ago, Wind Creek, the gaming unit of the Poarch Band of Creek Indians in Alabama, celebrated its expansion into Pennsylvania when the deal closed.
One of the most profitable of the 12 casinos in Pennsylvania, Wind Creek quickly announced that in addition to buying the resort, it was moving forward with a $90 million hotel expansion to increase the number of occupancies by 276 rooms. The investment plans also called for an additional 42,000 square feet of convention space.
That’s not all. Wind Creek said it’s considering plowing as much as $250 million into the adjacent No. 2 Machine Shop to transform the historic building into an indoor water park and 400-room hotel.
Casinos Go Dark
Pennsylvania has the fourth-most cases of COVID-19 in the US at 33,232 positive tests and 1,204 deaths. Because of Governor Tom Wolf’s (D) closure order of all nonessential businesses, the state’s brick-and-mortar casinos have been shuttered since mid-March.
As a result, gross gaming revenue (GGR) plunged 51 percent in March. Casinos won $153.48 million last month, down from $316.27 million in March 2019. Some of the losses were offset by internet gaming, which continues to operate unimpeded.
April GGR from brick-and-mortar casinos will total $0 in April. Wolf’s closure order runs through at least the end of the month. Even when the Commonwealth begins reopening certain businesses, casinos aren’t expected to be included in initial phases.
In March, Wind Creek Bethlehem – as the former Sands Bethlehem resort is now called – was the largest year-over-year loser. The casino reported GGR of just $14.66 million, a 71.2 percent decline from the same month in 2019.
Less is More
With every commercial casino in the United States closed, the less exposure, the better is currently the case for gaming industry operators.
Following its sale of Bethlehem, Las Vegas Sands only has casinos in Las Vegas, Singapore, and the world’s richest gambling hub of Macau.
Last week, Sands owner Sheldon Adelson, who, along with his wife, Miriam, controls nearly 57 percent of the publicly traded company, announced it was temporarily doing away with its dividend. He revealed projects in Singapore and Macau – expected to cost $5.5 billion – are still moving forward.
The billionaire also said that the economic climate is ripe for Sands to acquire existing casinos, which would be a first for the company.
“I see many strategic opportunities for our company, precisely because of our financial strength,” Adelson told investors. “It is because of this optimism that we are suspending the dividend so that we have maximum optionality in pursuing our strategic vision and in producing future returns.”