Loveman waffles on Philly … again; Sands and Galaxy surge

After getting into, then out of the incompetent Lewis Katz/Ed Snider casino consortium in Philadelphia, “direct discussions” are being held by Caesars Entertainment to reenter the moribund project. Its backers are asking for — guess what? — yet another two-month delay to get their act together. (A two-century delay might be insufficient.) Despite year after year of bungling, Sniderkatz refuses to accept the fact that it’s dug its own grave, even as the nails are being pounded into the coffin. But why would Gary Loveman want back aboard this S.S. Titanic? July revenue numbers from the state’s casinos provide a clue.

While Harrah’s Chester Downs has been one of the top three beneficiaries from the addition of table games (behind Sands Bethlehem and Parx Casino), it’s been losing market share in the Philly area. Even with a full month of table games this July (i.e., $4.5 million of additional revenue), Harrah’s Chester was flat year/year. With two exceptions, since the implementation of tables, Parx has consistently notched larger — often significantly greater — revenue growth.

And, with the coming of spring, SugarHouse (left) has become a regular inhabitant of the $20 million+/month range, meaning that Harrah’s is now much closer to third place in the market than first. Although it would mean throwing Harrah’s Chester to the wolves, one can see why Loveman would try to recapture lost market share by tossing some coins into Sniderkatz’s kitty and/or selling them a Horseshoe franchise to boot.

Absent table games, we’d probably be talking about Sands Bethlehem in some form of past tense, either as a Chapter 11 candidate or a Sheldon Adelson asset sale. The Las Vegas Sands chairman has already verbally written the casino off as a mistake and his Number Two, Michael Leven, appears bent upon finishing it in quick-and-dirty fashion. But bringing in the tables has really saved Adelson’s bacon in Bethlehem. Revenue growth has been some of the highest in the state, rivaled only by Neil Bluhm‘s behemoth Rivers Casino. But the latter enjoys the theoretical advantage of being in Pittsburgh, not in a drive-in market. Sands Bethlehem has gone from white-elephant status to one of the Keystone State’s top casino draws.

And not a moment too soon. Laborers have started loading in the 5,000 VLTs purchased by Genting Group for its Aqueduct Park casino, up the road in the greater New York City area. That’s an important feeder market for Sands, although I’m beginning to believe that the Aqueduct threat is overstated. The casino will offer glorified Class II gambling … and certainly none of the live table games which are Sands’ lifeblood in Bethlehem. Adelson’s problem child will get a nasty fiscal scare right around Halloween, when Aqueduct reopens as a racino, but I expect a gradual amelioration. Even if Sands were still inclined to sell its Bethlehem foothold — crazy at that now sounds — the mere threat of Aqueduct is going to depress the selling price for the rest of the year and probably a good ways into 2012, until Sands has had a chance to rebound.

Go figure. If you can wade through the currency muddle of a WSJ story and run some DIY conversion figures, what looks like an inexplicable dumping of Galaxy Entertainment Group stock by London-based firm Permira turns into a canny bit of profit-taking. Even though it sold 34% of its position in Galaxy at a slight discount, Permira still recouped 90% of its initial $680 million investment. Riding high on its recent Galaxy Cotai opening, the Hong Kong-based casino operator has been very good for Permira. Steve Wynn may rant and rave about “socialism” discouraging investment in Las Vegas, but the days when you could triple your money by investing in Strip casinos are long gone, never to return. And Wynn, the man who set the billion-dollar-megaresort train in motion, is as responsible as anybody.