Chloe Taft

‘From Steel to Slots’

Sands Casino Resort Bethlehem is one of the twelve casinos that currently operate in the state of Pennsylvania, United States. The site was a retrofitted steel plant located in the centre of Bethlehem city, which Las Vegas Sands (LVS) acquired after winning a bid in 2006.
This bit of history is part of the story that Chloe Taft, a Lecturer in U.S. History at Lake Forest College, decided to tell in her book, From Steel to Slots. Casino Capitalism in the Postindustrial City.
During a visit to Macau last month, she talked exclusively to Business Daily about LVS’ takeover and the influence of Chinese culture in the transformation of a ‘steel town’ into a ‘gambling town.’
The themed casino-resort of LVS in Bethlehem opened in May 2009, preserving some of the original structures and buildings sitting on a huge plot of land that once hosted Bethlehem Steel Corporation, “the second largest steel plant in the world, after US Steel,” says Taft.
But the property is changing hands soon.
MGM Resorts International, which is developing a nearly US$1 billion (MOP8 billion) casino resort in the nearby state of Massachusetts – MGM Springfield – entered into a US$1.3 billion deal with LVS last month to acquire the latter’s casino property in Bethlehem.
Why is MGM interested in purchasing it? Taft explains that MGM has lately shown an interest in expanding its developments following a “regional casino model,” given the fact that they were not previously successful in getting a license in New York.
“Springfield, Massachusetts, is also a similar kind of industrial background town, and leaders from Springfield, politicians, have gone to Bethlehem to see the model there, how it was done.”
On the reasons why LVS is willing to sell the property, she suggests the company has redefined its strategy that is quite opposite to MGM’s.
“Since the beginning, when Sands opened the Bethlehem casino, Sheldon Adelson said that he regretted the decision, and I think it is because it does not fit in to their global portfolio, with these very high-end, fancy, mega casino resorts. At the time, I think Sands was interested in expanding to other states in the United States with these smaller regional casinos, but they have since changed the strategy.”

Chinese spur
Casino developers in the U.S. seem to be harnessing a similar approach to Macau, that is, attracting Chinese gamblers.
On the one hand, there is a clear cultural appeal in casino design and marketing strategy of late.
“The Lucky Dragon is one of the few new casinos to open in Las Vegas since the recession, and it is specifically targeted towards Asian, Chinese gamblers.”
In addition, casino developers are reaching deep into logistics and the training of staff to get their Asian share of the market.
“In retrospect, it is obvious that Bethlehem, [being] closer to New York than Atlantic City is, right on the East-West highway, is always a prime location because it is so close to New York, which has a huge Chinese population. And so they are busing in thousands of Chinese and Chinese Americans. They are advertising in Chinese language newspapers, hiring Chinese-speaking dealers, and other service staff.”
According to Taft, Sands Bethlehem has therefore become one of the most profitable gaming destinations on the American East Coast.
“Since it opened in 2009, it’s always been the number two casino in Pennsylvania, after one outside of Philadelphia, but it is far ahead of that casino in table game revenues.”
Sands Bethlehem is the leader casino in table games revenue in the state of Pennsylvania, hitting US$203.2 million for the whole year of 2016, up 7 per cent year-on-year, according to local media reports. In addition, its revenue from slot machines reached US$305.03 million for the whole year of 2016, up 1.84 per cent year-on-year.
According to the Morning Call, some 43 per cent of the total revenues in Bethlehem came from table games, the highest in the U.S.
Meanwhile, Pennsylvania’s total casino take, including slot machines and table games, reached US$3.2 billion in revenues in 2016, according to the Pennsylvania Gaming Control Board (PGCB).
Sands Bethlehem’s casino currently operates 237 tables, and “the expansions they have done have been into tables and they have been almost entirely baccarat,” Taft confirms.
In a bid to PGCB last year, Sands Bethlehem planned to invest about US$90 million to expand its casino floor by adding a total of 81 tables. If approved, the casino would have the largest number of table games of any casino outside Las Vegas, according to The Morning Call.
A special approval would, however, be needed if the number of table games is to exceed the state’s maximum of 250. No other casino has more than 184.

Diversification ahead of gambling
The opening of Sands Bethlehem marked somewhat the passage from a single-commodity type of economy to a single-service type of economy.
In a way, that’s what the title of Taft’s book – ‘from steel to slots’ – suggests.
Yet, the scholar explains that economic diversification took the lead over casino development in Bethlehem.
“The main economies – and it diversified fairly early – are now healthcare and technology. It’s a kind of the exemplar postindustrial community in a lot of ways. So the hospital systems there are the main employers. The casino now is up there, but there was a more diverse economy before hand.”
As a matter of fact, she remarks that gambling was not legalized in the state of Pennsylvania until 2004.
The Racehorse Development and Gaming Act of 2004 sought to ‘boost revenues to counties and municipalities that host gaming facilities, create jobs, and fund property tax relief,’ according to the Center for Gaming Research at the University of Nevada in Las Vegas.
According to Taft, the local steel plant shut down completely in 1998, when “production at Bethlehem stopped completely, but the headquarters were still located there, operating, until the company filed for bankruptcy in 2001.”
When the bankruptcy was completed in 2003, marking the end of the Bethlehem Steel Corporation, “it was sold to what became Arcelor Mittal, which still operates some of Bethlehem Steel properties,” Taft adds.
At its peak, “the Bethlehem plant produced armaments and structural steel that was used in things like the Golden Gate Bridge, and a lot of New York’s skyscrapers. It really boomed through World War II,” she explains.
When a long, slow decline started in the 1970s, diversification was already setting in. “Bethlehem is interesting in that, when you think of in America that image of a city that died, Bethlehem never did.”


MGM seeking expansion
on the East Coast
The acquisition of Sands Bethlehem by MGM would give the Las Vegas-based company an even bigger presence on the East Coast. MGM reentered the Atlantic City market by buying a half interest in the Borgata, the largest casino in Atlantic City, in 2016. MGM has also bought out its partner, Boyd Gaming, and taken full ownership of the Borgata. In addition, MGM opened its US$1.4 billion National Harbor casino resort in Maryland in December 2016.