Steve Wynn, chairman and chief executive officer of Wynn Resorts Ltd
Wynn Resorts Ltd. fell as much as 10 percent Friday after Chairman and Chief Executive Officer Steve Wynn criticized Macau bureaucrats who haven’t told him how many gaming tables he’ll get at the USD4.1 billion resort he’s opening in March.
Wynn Resorts fell 2 percent to $72.30 as of 1:36 p.m. in New York after dropping as low as $66.35, the biggest intraday decline in almost two months. The shares had fallen 58 percent in the past year, cutting the value of Wynn’s personal stake in the company by more than $1 billion.
The uncertainty is complicating decisions about hiring and training workers and could force Macau operators to terminate employees, Wynn said on a conference call Thursday with analysts after reporting third-quarter sales that missed analysts’ estimates. The new resort, the Wynn Palace, is scheduled to open March 25 on the Cotai Strip.
“None of us are really clear on what our environment is going to be like going forward, and it makes planning and adjusting almost a mystical process,” Wynn said.
Macau accounts for more than half of Wynn Resorts’ revenue. A government crackdown on corruption, coupled with a softening Chinese economy, has prompted high-rollers to shun local casinos. Industry wide gambling revenue fell 33 percent in September, the 16th month of decline.
The first of the large U.S. casino operators to announce third-quarter earnings, Wynn Resorts posted revenue that trailed analysts’ estimates after a large drop in gambling in Macau. Profit beat projections.
The Las Vegas-based company said profit fell to 86 cents a share, excluding items, from $1.95 a share a year ago. That still beat the 84-cent average of 15 analysts’ estimates compiled by Bloomberg. Revenue fell 27 percent to $996.3 million as results in Macau shrank by more than a third. Analysts had been expecting $1.03 billion.
The slump in Macau comes amid a wave of new casino projects, many of which had been planned to operate with 500 baccarat tables each. Galaxy Entertainment Group Ltd. opened its newest property in May with just 150 tables. The next major resort, Melco Crown Entertainment Ltd.’s Studio City, is scheduled to open Oct. 27.
“The notion that a person who spent $2.5 billion, I’m talking about Melco now, would not know how many tables they’re going to have three weeks before they open is so preposterous that it’s worthy of comment,” Wynn said. “We are hopeful that we’ll be able to press the issue and get more clarity from the leadership of the local government.”
Wynn, 73, has often used company conference calls to opine on issues such as U.S. government policy and even U.S. gambling regulators, but his public comments about Chinese officials Thursday were unusual for executives doing business there.
High-roller play by all tourists is down as much as 50 percent in Las Vegas, where overall revenue also fell in the quarter, according to Wynn Resorts.
“I don’t know if this is the most satisfying quarterly phone call we’ve ever had, but at least it’s been the most candid,” Wynn said. Christopher Palmeri, Bloomberg
gov’t reacts to wynn’s comments
The government has reacted to Steve Wynn’s criticism regarding the allocation of gaming tables. The Secretary for Economy and Finance has met representatives from Wynn Macau yesterday to express the government’s dissatisfaction over the remarks made by Steve Wynn. In a press release, Lionel Leong reaffirmed the merits of the table cap policy.
junket operators in talks to start ethics code
Macau’s junket operators are in talks with the city’s government on a possible introduction of a code of ethics to improve their image, the South China Morning Post reported, citing a source familiar with the matter. Kwok Chi Chung, the president of the Association of Gaming & Entertainment Promoters of Macau, who attended the meetings, said there were no concrete details about a code of ethics, according to the report.
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