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Sands casino planning $90 million expansion

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Sands casino planning $90 million expansion

Sands Casino Resort Bethlehem is planning a $90 million expansion that would add restaurants, slot machines and table games to attract the kind of players who bet thousands of dollars a hand, casino officials told The Morning Call.

An expansion the size of two football fields would carry Sands' investment in south Bethlehem to nearly $1 billion, while creating the largest gaming floor among the state's 12 casinos, and expanding a table games business that's already among the most lucrative outside of Las Vegas.

It is no coincidence that the decision to forge ahead with the project comes just days after New Jersey voters overwhelmingly decided against expanding casino gambling into northern New Jersey, preserving a market that provides Sands with roughly half of its gamblers.

Construction could begin in January in Bethlehem, but Sands CEO Mark Juliano cautioned that the project will first need the approval of the Pennsylvania Gaming Control Board. The 81 additional table games would boost Sands' stable of tables to more than 300, requiring a special approval from the gaming board because the 2004 gambling law set a 250-table limit.

"We are well above capacity, particularly on the weekend," Juliano said. "We know there are nights when people can't find an open slot machine or a seat at a table they can afford. There's a need to add space to handle the demand."

Sands is arguably Pennsylvania's most successful casino, largely on the strength of patrons who drive or bus in from northern New Jersey or New York City. And it's easily the state's most lucrative gambling hall for table games, pulling in more than $18 million a month, which is routinely 50 percent higher than its closest competitor, Parx Casino in Bucks County.

No casino has asked permission for more than 250 tables, said Richard McGarvey, Gaming Control Board spokesman.

"We always figured Sands would be the first," he said. "When it comes to tables, they are far and away beyond anyone else. No one else comes close."

Despite that, Sands' $90 million bet isn't without risk. Since Pennsylvania approved gambling, new competition from Ohio, Maryland, New York, Delaware and West Virginia has caused statewide gambling revenues to plateau.

Sands has defied the trend, but its double-digit increases have slowed the past two years. Still, with more than $500 million in gross gambling revenues in 2015, the Bethlehem casino reported net revenues of $140 million.

With more than 3,000 slot machines and 237 table games, the complex attracts 9 million people a year, enticing them to lose an average of $1.5 million a day there.

Northern New Jersey casinos would have intercepted many of those patrons before they hit the Pennsylvania border. But on Election Day, nearly 80 percent of New Jersey voters rejected the plan for two new casinos, making it unlikely the question would return to the ballot in two years, which is the first time it could resurface under the law.

Across another border, competition is on the distant horizon. New York issued four licenses for upstate casinos in March. Its gambling law allows casinos to be approved for New York City seven years after the upstate licenses were awarded. That means New York City can't realistically have casinos before 2023, and the time it will take to approve and build one will probably carry it much later than that.

Sands' "north expansion" calls for a two-story, 100,000-square-foot addition on the casino's north side. It would make room for 380 more slot machines, 81 more tables and two restaurants — a noodle bar and possibly the Lehigh Valley's first Cheesecake Factory.

"We have a Grand Lux [Cafe], which owns Cheesecake Factory, in Las Vegas at the Venetian," Juliano said, referring to the casino owned by Sands' parent company, Las Vegas Sands Corp. "We have a relationship there. We don't know yet if it would be a Cheesecake Factory, but it will be something like that."

The added slot machines would bulge the casino's total to a state-high 3,543. A dedicated poker room, which calls for 30 new tables, would enable Sands to move its poker area from the center of the casino floor, freeing up prime space for more slot machines and table games, Juliano said.

The Paiza lounge, the private gambling parlor reserved for the biggest table games players, also would get more tables. Minimum bets in Paiza are $100, but some players have multimillion-dollar lines of credit with the casino and often bet tens of thousands of dollars a hand. The project would increase the number of Paiza's tables from 20 to 32.

Juliano would not say what portion of Sands' overall take comes from that room, except that it's "significant."

Sands has been working hard to attract big players. Most recently, it tore out the 30 rooms on the top floor of its hotel to install a dozen high-end suites and a private lounge where all food and liquor are free. The swankiest suites feature 1,600 square feet of space, with marble floors, four big-screen televisions and the kind of automated Toto toilets that are all the rage in Asia. When those suites aren't given to high rollers — they almost always are —they go for $675 to $900 a night.

Bethlehem Mayor Robert Donchez welcomes more investment into a casino complex that cost more than $800 million to build but he's hoping it will be followed by more investment outside the casino.

"They've been a good community partner and it's great to see them continuing to invest here," Donchez said. "But I'd like to see them start moving across the Steel property with that investment. I'm hoping this is the start of more to come."

Sands anticipates such a buildout, according to sources familar with the casino's master development plan, which includes a hotel tower costing more than $60 million and retail shops built into the former Bethlehem Steel No. 2 Machine Shop.

With its current hotel's 97 percent occupancy rate over the past three months, the tower likely would be the next project after the casino expansion.

"On a busy Friday or Saturday night, we're probably turning away 50 to 100 people because we don't have a room for them," said Greg Kite, Sands' executive director of operations.

But first things first, Juliano said.

"When it's time to add rooms we'll add rooms, but that's not now," Juliano said. "Right now we're focused on this expansion."

Juliano expects the expansion to be open by the end of 2017.

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SANDS' $90 MILLION BET

What's included in its project

•Two-story, 100,000-square-foot addition on north side of casino

•A poker room with 30 tables

•50 table games, including more for big money players

•370 slot machines

•Two restaurants

Source: Sands Casino Resort Bethlehem

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