Sands Bethlehem Defies Expectations by Using Their Macau Gaming Model in Pennsylvania
The regional trend with land-based casinos in the northeast is a decline in revenues. Atlantic City’s rapid decline is known to everyone who follows the US gaming industry, with 4 casinos closed this year and a fifth ready to close in mid-November.
In Connecticut, casinos which were once the talk of the gambling world, Mohegan Sun and Foxwoods Casino, have layed off workers to lower operating costs. Even the casino industry of Pennsylvania, which now boasts the second-highest revenue stream in the USA, has shown two years of decline.
Sands Bethlehem: A Winning Formula
Meanwhile, the Las Vegas Sands Bethlehem Casino is showing a remarkable surge. On table games like blackjack, baccarat, and craps alone, players lost $17.7 million at the Sands in August 2014. That’s the most an operation has collected on table games since such gaming was legalized back in 2010.
On the same day that Trump Plaza closed in Atlantic City, the Pennsylvania Gaming Control Board announced that the Sands was well ahead of its second-leading rival, Parx Casino in Bensalam, in revenues. This despite a stark regional decline in revenues.
Connecticut Tribal Gaming Decline
Lost amidst the Atlantic City closings is the sad tale of the Connecticut tribal gaming venues. Foxwoods Casino and Mohegan Sun have lost one-third of their revenues over the past 6 years. Readers might think those gaming entities still rake in obscene amounts of cash, and they would be right.
The problem with that thinking is it doesn’t take into account the kind of leveraging businesses often use to expand. In 2007 and 2008, the casino industry seemed strong and vibrant, and Mohegan Sun planned a vast expansion to become the biggest and most opulent casino in the world. That made sense in that economic climate, because Pennsylvania was expanding its gaming industry and the tribal casinos needed something bigger and better to continue luring gamblers.
Global Recession
Those renovations were underway when the real estate market crashed. The stock market crash and the resulting credit crunch severely bit into the amount of money Americans used for discretionary spending. Entertainment is the first type of discretionary spending that gets cut in a household budget, so middle class gamblers and high rollers alike stopped spending as much in the casinos, including Mohegan Sun.
Suddenly, Mohegan Sun had a larger debts and smaller revenues. Their entire business model changed. While one might be tempted to attribute the tribal gaming casino’s troubles to hubris or bad planning, the vast majority of the Wall Street experts did not see the global recession coming, either. If the financial wizards didn’t see it coming, then it’s no surprise that the entrepreneurs and businesses in America did not.
Meanwhile, Pennsylvania’s gaming industry continued to attract more revenues from nearby states. When people talk about the saturated market of the northeast, they might be saying that Atlantic City shouldn’t have 12 casinos. In the end, what they’re really saying is that Pennsylvanian casinos and racinos have soaked up profits from New Jersey, Connecticut, New York, and Delaware.
Asian-American Gamblers
The Sands Bethlehem is a big part of that. The Sands is the most profitable operation in the state with the biggest revenues east of the Mississippi. People might wonder how the Sands has accomplished what it has. The trick has been to attract a clientele that isn’t the traditional northeastern gambler, and one which have proven immune to much of the economic downturn.
In short, the Sands has attracted the Asian-American gambling demographic to their casino outside Philadelphia. They’ve done that by using a set-up similar to the one which has made the Las Vegas Sands the biggest gaming company in the world: appealing to Asian customer biases. The Sands Bethlehem offers 50 baccarat tables, which is a favorite with gamblers from the Asian cultures.
Players from the Asian culture prefer baccarat, because they believe in the concept of “flow”. The concept is derived from several religious and cultural antecedents: Taoism, Tai Chi, Chinese geomancy, and acupuncture. The idea is there’s an energy flow in everything, including games of chance. Baccarat is the ultimate expression of flow in a casino. Notice how Asian culture players stand back from the table when they first arrive, seeing how the game is trending.
Las Vegas Sands: Its Asian Edge
LVS is in touch with the Asian customer. What people might not understand is that the Sands is as close to an Asian gambling company as an American corporation can be. Their Macau gaming interests bring in $10 to ever $1 their Las Vegas interests collect. LVS has succeeded in Macau, which itself draws in seven times the revenue of Las Vegas each year.
Each week, 50 buses leaves New York City from Brooklyn, Chinatown, and Flushing, bringing Asian-American gamblers to Bethlehem. The Las Vegas Sands has the world’s largest database of Chinese gamblers, so they market their US casinos to those gamblers. Some of these people are jetsetting high-rollers who visit New York City and Los Angeles several times each year. Those stopping in New York City are likely to visit the Sands Bethlehem.
If Mohegan Sun and Foxwoods Casino are going to survive, they might take a page from the Las Vegas Sands. They might expand the number of baccarat tables on their gaming floor. They might advertise to Asian-American players in New York City. They might seek a partnership with one of the big Asian gambling companies, allowing them access to their list of Chinese high rollers. Perhaps that’s easier said than done, but the game plan is there for all to see at the Sands Bethlehem.
