CHICAGO (MarketWatch) — Shares of Las Vegas Sands crumbled more than 33% Thursday after the one-time high-flying casino company said it will likely violate debt covenants this quarter, raising the specter that it might not survive the current economic crisis.

In a filing with the Securities and Exchange Commission, Sands  told regulators that the size of its debt is now above the agreed maximum leverage ratio. And, if it can’t drum up more financing, the company said it could well default on its IOUs.

Shares of Sands plummeted $3.81 to close at $7.85. The stock had been rebounding lately on hopes that Adelson and his family would pump some of their own cash into the company to fund ongoing developments and operations. After running up to as high as $150 last year, the stock cratered at $4.32 last month.

The company’s auditors, PricewaterhouseCoopers LLP, said in a filing that if Sands does default on debt covenants, lenders could demand to be repaid sooner, something that “raises substantial doubt about the company’s ability to continue as a going concern.”

The economic meltdown has battered Las Vegas particularly hard as customers stay away in droves and the ones who do arrive spend less. In addition, Sands’ properties in Macau have been hurt by new restrictions on visas for gamblers arriving from mainland China.

Further, casino operators rely on huge loans to fund aggressive expansion plans and the credit crisis has all but dried up the money tap forcing companies like MGM Mirage and Boyd to postpone or scale back some of their more ambitious development projects.

“The good times for the gaming industry are over — at least in the short-term outlook,” said Joseph Weinert, a senior vice president at Spectrum Gaming, an industry consultancy. “As we see with Las Vegas Sands, even the titans of the industry are having to make major concessions with respect to their financial structures, development plans and operations. This industry is not for the timid right now.” End of Story