Why Did the MGM Resorts/Sands Casino Bethlehem Sale Fall Through?

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Friday, June 9th, 2017 | Written by Lucy Brown

MGM Resorts International will not be purchasing the Sands Casino Resort Bethlehem as once thought, and while no official reason has been given as to why the deal fell through, it is believed that a new major gambling bill may have been responsible for frightening away MGM Resorts. Trying to downplay the failed deal, Sands Corp. President Robert Goldstein commented:

“We’ve never confirmed that sale talks were happening, but I can say that we will continue to operate Sands Bethlehem,. I think Bethlehem represents a pretty extraordinary investment in terms of what we put into the market versus what it returns to us, although it’s a small number, obviously, relative to our other assets. It’s still a compelling investment. We’re very proud of it.”

A $1.3 Billion Deal

Las Vegas Sands (LVS) had been talking about a $1.3 billion deal to sell the most lauded casino in Pennsylvania to MGM Resorts. However, it has now been reported that LVS executives have decided that Sands Bethlehem’s current performance in fiscal terms is the main driving point for their decision not to sell to the rival casino company. After all, while, Sands Bethlehem is still the smallest casino from a Las Vegas Sands point of view, the venue also draws gamers from all around the New York City and Philadelphia areas.

Development Issues

Meanwhile, local civic and business leaders have pointed out that Las Vegas Sands has been a good neighbor during its decade of operation in Bethlehem, Pennsylvania. That said, a lot of people were still quietly hoping that MGM Resorts would go through with the deal, as Las Vegas Sands has failed to develop the commercial property around the casino that people had originally anticipated. MGM purchasing the casino would therefore have moved expectations of the development being completed onto MGM Resorts, and as Mayor Robert Donchez explains:

“It’s very important for the Sands or MGM to continue developing the site, and if they are not interested in developing the site, consider selling off parcels to developers who are.”

In the meantime, Las Vegas Sands Corp. spokesman Ron Reese responding to the claims by putting responsibility squarely on the shoulders of lawmakers, stating:

“Any future investment in Sands Bethlehem will be dictated by the actions of the state Legislature,” Reese said. “If job-killing policies that expand gambling are put in place, it’s infeasible to reinvest in this property.”

Reasons for Failed Deal

It has yet to be said what the official reason is for MGM Resort’s decision to pull out of the deal, although online gambling media and Pennsylvania’s news outlets have a few ideas. One of the top theories is that MGM was unnerved by changes in the gambling laws of Pennsylvania, which would allow airport gambling and reduce revenues by hiking up taxes. If this is true, then the MGM Casino Resort Bethlehem may not have been as attractive as the firm may have hoped. While other states typically have more casinos than Pennsylvania does, the taxes on gaming receipts means that Pennsylvania boasts the second highest casino gambling tax revenue in America.

The Las Vegas Sands Corp has made it abundantly clear that it is not a fan of the proposed changes, either. Bringing in the slot machine gambling options at bars, taverns, airports and other off-track betting locations appears to be something that truly bothers Las Vegas Sands. Members of the Las Vegas Sands team has said that these changes would completely ruin the business model that lets Pennsylvania’s gambling industry bring in an impressive $1.4 billion annually in tax revenues. It also allows them to keep 18,000 people employed, helping the economy.

This is a common thing. Businesses see a doomsday approaching when their tax percentage is going to go up, or when their competition level heightens. Yet in an industry that boasts such high taxes, it may very well be true that the proposition itself, even if it has not been implemented, has become the reason that MGM Resorts chosing to get out of the deal. While other theories are still circulating, this one appears to have the greatest level of evidence and is becoming widely accepted by speculators.