Wynn Macau Ltd. said it will cooperate with regulators after the government of the Chinese territory voiced concern over sexual harassment allegations swirling around casino magnate Steve Wynn.
Macau regulators talked with Wynn management and want to make sure major shareholders, directors and key employees meet suitable qualifications, the Gaming Inspection & Coordination Bureau said in an email late Monday. Shares of Wynn Macau dropped 4.8 percent in Hong Kong yesterday, giving it the biggest two-day loss since 2014 on a closing basis.
Wynn Macau said in a statement it will cooperate fully with any requests from the Gaming Inspection & Coordination Bureau.
The scandal threatens to complicate Wynn’s plans for the world’s largest gambling hub, since regulators in Macau are set to outline the process for casino-license bidding later this year, with permits up for renewal beginning in 2020. The Asian gaming enclave now accounts for more than three-quarters of Wynn’s earnings, and the casino operator has big plans for a further expansion after opening the Wynn Palace there in August 2016.
Wynn’s billionaire chairman stepped down as Republican National Committee finance chair over the weekend following reports that he had engaged in multiple instances of sexual harassment. The impact of the claims have reverberated in Macau and Las Vegas. Wynn Resorts Ltd. shares have had the biggest two-day loss in about eight years.
Macau Resurgence
Business is booming in Macau as high rollers have returned to the territory after a government crackdown. Wynn gained the most market share last year among casino operators with the resurgence of the elite gamblers, according to gaming data. Total gambling takings rose 19 percent in 2017, the first full-year of growth since 2013, and analysts are optimistic about the market this year with the opening of new resorts.
Increased Scrutiny
Any fallout from the allegations could have a major impact on Macau. Gaming regulators in Nevada and Massachusetts are looking into the accusations, and punitive actions in the U.S. could prompt Macau watchdogs to ramp up their scrutiny, said Wang Changbin, director of the Gaming Teaching & Research Centre at the Macau Polytechnic Institute. Upsetting the market by ousting an existing casino operator may be difficult, Wang added. Macau’s gaming law stipulates that the reputation of the operator and its controlling shareholder is considered in the bidding process for licenses.
Macau legislator Pereira Coutinho said Wynn’s situation shouldn’t create difficulty with its operating license, as the personal allegations don’t hurt the enclave’s image as much as more damaging industry scandals in the past that didn’t spur changes in the laws. “The former Portuguese colony is not responsive enough to solve problems that have caused negative impact to the society,” he said.
Founder’s Fate
Some investors are calling for the company to oust Steve Wynn, raising the prospect of a volatile transition period. Bloomberg Intelligence analyst Margaret Huang says possible successors to the 76-year-old casino magnate include Linda Chen, chief operating officer of Wynn Macau. Wynn cited Chen as one of the company’s executives fit to take over when asked about a potential replacement in 2011.
The repercussions could be felt beyond Macau. Japan is opening up to casino resorts, and government officials are already sensitive to negative perceptions about the industry as they consider regulations and licenses for casino operators. Daniela Wei, Bruce Einhorn, Bloomberg
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