Gaming | Wynn Resorts falls after signs of market cannibalization

Wynn Resorts Ltd. tumbled as much as 9.7 percent in late trading after reporting steep declines in revenue and profit at its casino in Macau, the company’s biggest market.

While operating revenues rose 9 percent in the second quarter to USD1.61 billion, the total fell short of analysts’ estimates of $1.67 billion. Earnings of $1.53 a share, excluding some items, trailed projections of $1.92 a share.

The Las Vegas-based casino giant said that revenue fell 15 percent at Wynn Macau, driven by a decline in betting by high-rollers. Operating revenues at the two-year-old Wynn Palace on Macau’s Cotai Strip jumped 57 percent, raising the possibility that the newer resort may be cannibalizing the older one. Earnings at the company’s Las Vegas casinos fell 6.1 percent.

Casino revenues from the Wynn Macau property were $473.3 million for the second quarter of 2018, an 18.1 percent decrease from the same period in 2017. Non-casino revenues amounted to about $70 million, representing a 15.9 percent increase.

Meanwhile, operating revenues from Wynn Palace and total Las Vegas operations increased $224.2 million and $3.5 million, respectively.

“Wynn Macau had a tough VIP environment on lower volumes from several junket operators as several competitors got back into the game with new rooms and more credit,” Chief Executive Officer Matt Maddox said on a call. “Wynn Macau won’t compete on price.”

Shares of Wynn were down 8.5 percent to $146.35 in late trading after falling as low as $144.55. The stock is down 5.1 percent this year.

Casino operators in Macau, the world’s largest gambling market, tumbled in U.S. trading after betting revenue grew less than expected in July.

The stocks also took a beating after Caesars Entertainment Corp., the largest casino owner in the U.S., said room revenue in the third quarter would be light due to fewer events in Las Vegas and competition from rival operators for leisure travelers. MDT/Bloomberg