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In a throwback to a time when Pennsylvania was known for thriving steel-making towns, Las Vegas Sands (NYSE: LVS ) is set to open Sands Casino Resort Bethlehem in the renovated Bethlehem Steel plant.
The $743 million project is very well placed, as it is closer than Atlantic City to most people in New York and northern New Jersey. And while a tough economy like this may seem like a bad time to open a new casino, Pennsylvania's budding gaming industry -- which was only legalized in 2004 -- reported year-over-year growth of nearly 14% in April.
Sands Bethlehem is just another step that Sands has taken to further diversify itself outside of the Las Vegas Strip. Strip giant MGM (NYSE: MGM ) has shown how a heavy debt load and an over-reliance on one geographic area can lead to grasping at straws. Sands and Wynn (Nasdaq: WYNN ) , on the other hand, haven't had a fairytale ride through the recession, but have been buoyed by their significant exposure to non-Vegas markets like Macau. Gaming companies like Ameristar (Nasdaq: ASCA ) and Penn National (Nasdaq: PENN ) , neither of which has any Strip presence, have been holding up quite well during the storm.
As I've noted in the past, the Motley Fool's CAPS community hasn't had a particularly sanguine view of the casino industry. And Las Vegas Sands -- which sports a two-star rating out of a possible five -- is towards the bottom of the community's list. In fact, just recently, Frenchyx, one of CAPS' All-Stars, rated the stock an underperformer, citing its debt load and reported losses. Given the economic uncertainties and that heavy debt burden, I can't completely disagree.
At the same time though, I really like Sands' property portfolio, which includes the Venetian and Palazzo in Vegas; Sands, Venetian, and Four Seasons in Macau; and now Sands Bethlehem in Pennsylvania. And the company has plans for further development in Macau, as well as more diversification through a project in Singapore.
I fully expect that Sands could continue to take some lumps, but for those with a stomach for risk, I wouldn't wipe this stock off the radar.