LAS VEGAS is coming to Bethlehem and it’s building a brand new inn. After years of controversy over the redevelopment of one of America’s most historic industrial cities, the residents of Bethlehem, Pennsylvania, have turned to a casino to help to restore long-lost prosperity.

Construction started last month on an $800m casino and hotel on the derelict site of Bethlehem Steel, the industrial behemoth that once built guns and armour plate for US navy battleships in the largest machine shop in the world.

The project is going ahead despite opposition from community groups, which are worried that the town that calls itself America’s Christmas City is being turned into an eastern outpost of Las Vegas – known as Sin City.

Yet the scheme has support from conservationists, who had begun to despair that some of the greatest relics of America’s early 20th-century industrial might would be demolished or left to crumble. The steel giant went bust in 2001 and the Las Vegas Sands Corporation has promised to restore the vast No 2 machine shop and other historic buildings.

The Sands group is one of several casino operators that moved into Pennsylvania after the state legalised slot-machine gambling in 2004. Many inhabitants were appalled that a city founded on Christmas Eve 1741 by a breakaway group of Moravian Protestants should be encouraging vice.

“The issues here go far beyond gambling or not gambling,” Johanna Brams, a resident, said. “A Las Vegas mentality does not belong in Bethlehem.” John Callahan, the mayor, tried to placate critics by proposing to ban massage parlours, X-rated video stores and strip clubs near the site.

The casino – only a 1½ hour drive from New York – is expected to attract 5m visitors a year. Although Pennsylvania allows only slot-machine gambling, experts believe it will eventually add poker, blackjack and other table games.

Sands is also building a 300-bed hotel. There has been no mention of stables.

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