How could Sheldon Adelson make the same mistake twice? True, the muffled, strung-out opening of The Palazzo wasn’t the full-on clusterfuck that was Venetian’s 1999 face-plant. Still … opening a hotel that didn’t have toilets in all the rooms?

By not learning from the past, Adelson was doomed to repeat it. A June 9 Majestic Research investor note indicates that he’s paying a price. One salient fact stands out among many in the report: “The Palazzo had the 16th-highest share of Strip game usage despite being the newest property on the Las Vegas Strip." (“Game usage” basically boils down to “Bodies at the slots and tables.”) Even with amenities finally coming on line, “the property does not appear to have ramped meaningfully.”

It’s a time-validated truism that the newest big casino in town elbows its way to the forefront, at least until the novelty factor wears off. But, by Majestic’s measurements, Palazzo isn’t even keeping pace with the Venetian, which clocks in at #13. And while Majestic found that, on average, one out of every four gaming positions on the Strip were occupied, at Palazzo it was but one in five.

On the positive side, Las Vegas Sands has increased its market share in Las Vegas by 44% and revenue by “roughly 50%.” Also, reported revenues may not accurately reflect the level of play at Venetian/Palazzo. “Table luck variations have impacted the LVS’ … casino revenue by an average of 15% during the last 12 quarters,” writes Majestic’s Matthew Jacob. “Because LVS pursues high-end table play, casino revenue at the Venetian and Palazzo could be more volatile than at most other properties.”

Either way, Majestic is forecasting Sands to report Strip revenues in the $325 million-$380 million area … putting the midpoint $16.5 million below the Street consensus of $370 million.

If Adelson’s hurting himself, he may derive some cold satisfaction from Jacob’s conclusion that he’s not helping Steve Wynn by generating significant foot traffic to Wynn Las Vegas. For that matter, while we may enjoy jeering at the smoke-choked, departed and unmourned New Frontier (which was like a big, seedy locals’ casino mistakenly flung onto the Strip), its absence is hurting Wynn, too. Majestic notes that game usage at Wynn has been down 6% ever since the Frontier coughed its last.

All that being said, you’d probably rather own Wynn than Palazzo, as the former continues to enjoy a disproportionately large amount of play, per Majestic’s metrics. Jacob forecasts a 14% downturn in second-quarter revenues, mostly because Wynn enjoyed “the benefit of above-average table luck, which added about $11 million to … revenues.”

Majestic’s 2Q08 projection: $273 million-$302 million; Wall Street’s consensus: $305 million-$310 million.