In a conference call last week addressing his company’s third quarter results, Steve Wynn threw some jabs at Macau’s government and how it is affecting the casino industry there. Wynn Resorts is scheduled to open a new casino there in March.
Through the first nine months of the year, Macau gaming revenue is down 36 percent compared to the same period last year. Gaming revenue in 2014 was $44 billion. Gaming revenue has fallen for 16 straight months.
“None of us are really clear on what our environment is going to be like going forward,” Wynn said. “And it makes planning and adjusting almost a mystical process.”
Wynn said that the government is putting a cap on the number of table games that will be allowed at his second casino in the city. He was planning for 500 table games, but it is unclear right now how many he will ultimately be permitted to have.
“Here in America we would never have a Las Vegas of the diversity we’ve had if the city had told us how many tables we could spread,” Wynn said. “The table cap is the single most counterintuitive and irrational decision that was ever made.”
The VIP gambling segment once accounted for 70 percent of Macau gaming revenue. High rollers account for about 50 percent of the city’s gaming revenue these days, thanks to mainland China placing greater scrutiny on the extending of credit to gamblers. High-stakes baccarat has historically driven 91 percent of Macau’s gambling dollars
Wynn’s $4 billion casino project is part of $20 billion that casino developers have collectively invested into new Macau projects.
“Our construction of our hotel in Macau is on schedule,” Wynn said. “We’re scheduled for March 25 opening. And the results of the last quarter were consistent with the things we’ve seen in previous quarters. And that is almost approximately half business of VIP is gone and may be shrinking. It’s caused us to review our credit policies and our attitudes toward junket operators. And some of them have gone out of business, and I think others will indeed go out of business, which means you have to focus very intensely on the policies that you employ with regard to the credit that the junket people enjoy in terms of the chips that are advanced to them.”
Despite the concerns, Wynn said he is confident about Macau.
“My long-term confidence in Macau is still strong,” he said. “I love the position we’re in in terms of being part of that community. The issue here has to do with short-term adjustments, not long-term confidence.”
For the third quarter, Wynn Resorts’ revenue was $996.3 million, down from $1.37 billion during the same period a year ago. The company’s stock price was as low as $51 a few weeks ago.
