Billionaire Wynn Says Las Vegas Slump Is a `Damper' to New Investment
Billionaire Steve Wynn said he will build a third resort in Macau while skipping potential opportunities in Las Vegas because the Obama administration’s policies “do not encourage investment.”
Wynn, chairman of Wynn Resorts Ltd., may start construction of a resort in Macau by the end of next year, with an opening scheduled in 2014, he said in an interview today. Hong Kong- listed unit Wynn Macau Ltd. has applied to the government to lease 52 acres on Macau’s Cotai Strip and the project proposal is pending approval, he said.
Wynn Resorts, which got 60 percent of last year’s revenue from Macau, opens the HK$4.7 billion ($605.4 million) Encore casino resort today in the former Portuguese colony. The company is counting on China’s so-called high rollers and the “premium mass market” to gamble at its card tables and slot machines as growth slows in its home market of Las Vegas.
The planned Cotai resort “has a thing that you don’t get in China very often, it has space, it has gardens,” Wynn, 68, said today in Macau. “We will build one modestly sized hotel with the most beautiful gardens and extended spaces.”
Gaming revenue in Macau, the only place in China where casinos are legal, rose to a record last year as tourist arrivals in the second half rebounded after the global financial crisis. Visitors to the former Portuguese enclave bet 119 billion patacas ($15 billion) on cards, slot machines and other games last year, an increase of 9.7 percent from 2008.
China is the only country in which Wynn will be boosting his investments and he won’t be partnering with another casino operator for the Cotai project, he said.
Macau, the only place in China where Wynn has invested, in 2006 surpassed Las Vegas as the world’s biggest gambling center by revenue.
The Cotai facility would cost “a lot more” than the 414- suite-and-villa Encore urban hotel the company opened today, said Wynn, who’s also the company’s chief executive officer. The company will probably complete the documents, financing and bidding plans for the project in a year’s time, he said.
Wynn Macau rose 1.5 percent to close at HK$12.36 in Hong Kong. The stock has gained 29 percent this year compared with a 1.7 percent decline in the benchmark Hang Seng Index.
Wynn Resorts said April 8 it abandoned a bid to take over a riverfront casino project in Philadelphia because “this particular project did not, in the end, present an opportunity that was appropriate” for the company. He didn’t elaborate.
The casino operator had offered to provide about $250 million while borrowing the rest of the estimated $600 million cost to design, build and run the casino, according to March 3 testimony to Pennsylvania regulators.
Wynn also dropped out of bidding to redevelop the Aqueduct Racetrack in New York City in November, without saying why.
‘Wet Blanket’ Policies
“The governmental policies in the United States of America are a damper, a wet blanket,” Wynn said in a separate interview aired today on Bloomberg Television. “They retard investment, they retard job formation, they retard the creation of a better life for the citizens in spite of the rhetoric of the president.”
President Barack Obama, highlighting an April 2 government report that showed the U.S. economy last month created the most jobs in three years, declared the “worst of the storm is over.” In addition to the $862 billion stimulus program enacted in February 2009, the president last month signed into law an $18 billion jobs bill that provides a tax break to companies hiring unemployed workers.
“I don’t think the Las Vegas market at the moment beckons a large investment,” Wynn said. “The economic outlook in the United States, the policies of this administration, which do not favor job formation, do not encourage investment at all.”
Wynn Resorts, which generated 40 percent of revenue from Nevada last year, is seeing “stronger convention bookings” in Las Vegas, Wynn said. Still, hotel room rates have “stayed down,” he said.
China’s economy grew 11.9 percent in the first quarter, the most in almost three years.
The expansion in China and its neighbors is luring more visitors to visit Macau, said Jonathan Galaviz, an independent strategist.
“There’s lot of opportunity in Macau, and that is a function of the overall macroeconomic environment in Asia and the continued growth in China” Galaviz said in a Bloomberg Television interview today. “Obviously the tourism sector in Macau continues to be a very strong-performing sector.”
Visitor arrivals increased from August to December after dropping 15 percent in July, according to government data. Mainland Chinese arrivals to Macau rose 1.9 percent in the first two months of this year, according to the China National Tourism Administration.
“I’m thrilled and I love it here,” Wynn said today in Macau. “I feel a very steady, stable, consistent direction.”
To contact the reporters on this story: Wing-Gar Cheng in Hong Kong at firstname.lastname@example.org