Bethlehem, built on steel, betting on casinos

BETHLEHEM, Pa. - This historic town, nicknamed the "Christmas City," where steel was once king, is preparing for a seismic image shift when the $743 million Sands Casino Resort opens Friday.

Michael Horn has no doubt that the gambling hall - which will be the largest of Pennsylvania's eight casinos in size and number of slot machines - will transform his hometown, one in the midst of reinventing itself.

"It's going to add a lot of spice to Bethlehem, and maybe jump-start the economy," said Horn, 51, a musician.

But the stakes are high. For Bethlehem, it involves its sense of self, its history, its businesses, and its quality of life.

For Northampton and Lehigh Counties, the City of Allentown, and the Commonwealth of Pennsylvania, which can't build these casinos fast enough, there are shares of the revenue.

For struggling Atlantic City and the casino industry to which it is hitched, Bethlehem's casino could be devastating competition.

The seaside resort has already lost a substantial chunk of its slots business - down 16.5 percent the first four months of this year - most of it to two casinos in the Philadelphia suburbs.

Sands Bethlehem now threatens to siphon Atlantic City's most affluent customers, the ones from North Jersey and New York, who make up 45 percent of its business. I-78 will take them directly to Bethlehem.

The casino has a full-page ad in the current New Jersey Monthly magazine. A large billboard teasing its opening went up last month on the outbound Atlantic City Expressway.

"It's a New Jersey casino that happens to be in Pennsylvania," said Harvey Perkins of Spectrum Gaming Group L.L.C. in Linwood, N.J., only half-joking. "When you realize that Route 78 is a direct, low-toll road from North Jersey to the Sands' front door, you add a new dimension of convenience gaming for the North Jersey customer." I-78 has a 75-cent bridge toll versus the multiple tolls on the expressway and the Garden State Parkway, which are significantly more.

Sands Bethlehem will debut Friday with 3,000 slot machines, four restaurants, and two lounges in a soft opening to allow the Las Vegas operator to work out kinks. A grand opening is scheduled for June 9.

After six months, the casino will ramp up to 5,000 machines on its cavernous, 139,000-square foot gaming floor. The next-largest slots parlor in Pennsylvania is the recently expanded Meadows Racetrack & Casino near Pittsburgh, which measures 135,897 square feet with 3,749 slot machines.

The largest casino in Atlantic City, the Borgata Hotel Casino & Spa, has a 161,000-square-foot gaming floor with 4,100 slot machines.

"We are the equivalent of two properties in Atlantic City," said Sheldon Adelson, chairman and chief executive officer of Las Vegas Sands.

At its 5,000-slot capacity, the casino is expected to generate $465.3 million in annual gross slots revenue. That would be more than what the Atlantic City Hilton and Trump Marina casinos combined made on slots and table games last year ($452.7 million).

"It's going to be a madhouse around here when they open," said Bethlehem resident Debra Pittenger, 46, who owns Jackpot Amusements Inc., which sells break-open tickets, punchboards, and bingo supplies to local bingo halls and private clubs.

Still, she said, the casino will give the city of about 73,000, the state's sixth-largest, a much-needed lift.

"Because it's been so long since the last industry was there, any activity is good activity," Pittenger said.

Gambling is the new 24-hour industry on the same land that muscular Bethlehem Steel Corp. once occupied.

At its peak, Bethlehem Steel was the second-largest steel producer in the country, after Pittsburgh's U.S. Steel, and the largest shipbuilding company in the world. It built more than 1,100 ships in World War II alone. The armor plate and guns for the ships were produced in Bethlehem and assembled in the company's 11 shipyards on both coasts.

Pete McDonough attended Lehigh University in Bethlehem from 1971 to 1975, and recalled the vibrancy of a town that seemingly never slept.

"Steel was king, a place where the factory was on 24 hours a day and people worked three eight-hour shifts," said McDonough, 55, who became press secretary for Christie Whitman when she was governor of New Jersey. "You saw people driving in to get over to the south end of the steelworks at 4 a.m., and you saw people going home."

But by the early 1980s, the U.S. steel industry was in decline, the result of inexpensive imports from cheaper foreign labor. It never recovered.

In 2001, Bethlehem Steel filed for bankruptcy. The company was dissolved, and the remaining assets - including six plants - were sold to Ohio-based International Steel Group in 2003. Two years later, ISG merged with Mittal Steel International Holdings B.V. of Rotterdam, Netherlands.

In early 2007, most of the 163-acre Bethlehem Steel site was sold to Las Vegas Sands, and casino construction began that fall.

Las Vegas Sands, which owns 124 acres, saved the blast furnaces, the blowing engines, the No. 2 machine shop, the Bessemer steel-making building dating to 1872, and 19 other original structures. The casino sits on the eastern end of the buildings.

Other features celebrate the past. A 542-foot-long ore bridge hovers over the entrance of the casino with the Sands logo. Inside, beams of amber light from the high ceiling resemble molten steel. There are steel columns throughout.

After Bethlehem Steel closed its local operations in 1998, the company tried to reduce the impact on the Lehigh Valley with plans to revitalize the city's south side, said Steve Donches, who worked for Bethlehem Steel for 35 years.

The firm hired consultants, he said, and the consensus was to rename its site Bethlehem Works and use the land for cultural, recreational, educational, entertainment, and retail development.

Part of that plan was to restore, in association with the Smithsonian, the National Museum of Industrial History, which sits near the casino.

"It's to tell the story of the achievements of American industry in the development of our nation," said Donches, the museum's president.

The museum is scheduled to open next year, depending on fund-raising to cover the $26 million renovation, he said, adding that the casino's proximity should boost attendance.

Pittsburgh is the other steel town looking to casinos for economic salvation.

That city will soon have a pair. The Meadows unveiled its expanded facility last month, and the $780 million Rivers Casino is to open on the North Shore waterfront in early August.

Sands Bethlehem is a one-hour drive from Philadelphia and 90 minutes from Manhattan. Las Vegas Sands hopes to draw half the casino's business from North Jersey and New York - customers such as Ann Ambrose of Staten Island.

"You tell me I don't have to pay tolls, I'll go," said Ambrose, 65, a pharmacy technician who is planning a trip to Bethlehem. She said she typically played the slots at Caesars or the Trump Taj Mahal in Atlantic City. "This will be shorter and more convenient."

Competitors are watching anxiously. Mohegan Sun at Pocono Downs, a racetrack with slots near Wilkes-Barre, will launch promotions this week to coincide with the casino's opening.

Residents here are bracing for the good (1,000 casino jobs, economic benefits to the county and city) and bad (increased traffic, maybe more crime) that come with a major casino.

George Lioudis, part-owner of Lehigh Pizza on West Third Street, less than a block from the casino, is expecting a boost in business from the new visitors.

"Absolutely," he said as he helped customers. But he added: "I'm not convinced about the amount of money the casino will generate for us - the local people."

Bethlehem stands to get $8.6 million annually for hosting the casino, Northampton County $2.4 million, Allentown $3.2 million, and Lehigh County $822,400, according to the state Department of Revenue.

But there are critics. Elizabeth Shafer is 21 and just old enough to play the slots at the new casino, but she said not to count on it.

Her grandfather worked at the old steel plant repairing machines. Each Christmas season, she watches the carriage rides give tours along Main Street.

"We're the Christmas City," said Shafer, who was born and raised in Fountain Hill, an adjacent borough, and is a junior at nearby Moravian College. "I just don't think a casino is part of the aesthetic of the area.

"People have been coming here for culture and history," she said. "People coming here to blow their money at a casino during bad economic times is not good."