Layoffs at casino in Bethlehem

Less than a year after a grand opening that rivaled the glitz and glamour of a Las Vegas revue, Sands Casino Resort in Bethlehem is laying off 80 employees.

The cuts, announced Friday, will be across the board, said Sands president Robert DeSalvio, but more of them will occur in the casino's largest department: food and beverage. The casino houses four restaurants, two of which opened last fall.

The 9 percent reduction brings the casino's workforce to 780, down from its current 860, and nearly 200 fewer than when it opened last May 22 with 3,000 slot machines.

The attrition is attributed mainly to the economy and comes at a time when the state's casinos are gearing up to add table games.

"It's based on business demand," DeSalvio said Friday. "It's fairly common for casinos and other businesses to go back through and see where you can run things more effectively."

The $743 million casino debuted nearly a year ago with Gov. Rendell and Sheldon Adelson, Las Vegas Sands chief executive officer, on stage, along with the famous Blue Man Group, which performs regularly at the Venetian Resort Hotel casino on the Vegas Strip, also owned by Las Vegas Sands.

Sands had originally projected that the casino would bring in $465 million a year in gross slots revenue. Based on figures from the Pennsylvania Gaming Control Board, which regulates the state's gambling industry, the casino is expected, instead, to generate about $347 million in its first year.

Perhaps more telling is the casino's revenue in the first 39 weeks of this fiscal year. Sands appears likely to bring in less than $250 million this fiscal year, which ends in June.

Although the Bethlehem casino faces competition from two nearby casinos in the Poconos - Mount Airy Casino Resort and Mohegan Sun at Pocono Downs - as well as Atlantic City, DeSalvio said, the numbers were more a reflection of "opening up at a very difficult economic time."

"We're the only casino in the Lehigh Valley," he said. "We are pretty much alone out here. What was unexpected is the economy taking such a big turn.

"As the business gets more mature," DeSalvio said, "you have to look at the operation and match the number of team members to business volume."

Two bright spots, DeSalvio said, are the addition of 89 table games as early as July, and a hotel scheduled to open next to the casino in May 2011.

He said 400 workers would be needed to staff the table games, and an additional 100 for the new hotel. DeSalvio said those who have lost their jobs would have first consideration for the openings.

"Hopefully, we will get most of them back to work very soon," he said. "We feel the business will grow with table games coming."

This month, groundbreaking is scheduled for the 300-room hotel, which will create about 350 construction jobs over the next 12 months.

Slots revenue is taxed at 55 percent in Pennsylvania, compared with 9.25 percent in New Jersey. Pennsylvania uses the gambling proceeds toward property-tax relief (wage-tax relief in Philadelphia) and aiding the horse-racing industry.

So far, nine gambling halls have opened throughout the state. Five more are yet to open, including two in Philadelphia and one at the Valley Forge Convention Center.

Gaming analyst Andrew Zarnett of Deutsche Bank AG said what's happening in Bethlehem was a result of difficult economic conditions.

In addition to the 80 layoffs, a spokesman for the Sands said, 120 workers left on their own over the last year, and those positions were never filled.

"There is a natural attrition rate with casinos," Zarnett said. "Secondly, the economy has been softer than expected and has put pressure on casino revenues.

"It's happening in almost all regional jurisdictions."

A report released this week by the Gaming Industry Observer showed that the average length of stay for U.S. casino customers exceeded 15 hours last year - a full hour longer than just three years ago.

But the same study found net revenue per visitor fell to an average of $8.84 an hour, down from a peak of $10.54 an hour in 2006.