Wynn Tumbles as Macau Casino Table Allotment Falls Shortby and
Concerns for new casino overshadow gains for second quarter
Company to move equipment from existing resort to fill gap
Wynn Resorts Ltd. fell Friday after saying a new $4.1 billion casino in Macau may be allotted about half of the baccarat tables analysts were expecting while betting at its current resort declined.
Wynn, the casino operator founded by billionaire Steve Wynn, plunged 5.9 percent to $98.52 at 9:33 a.m. in New York, the most in a month. Betting from high rollers in Macau, which generates more than half of sales and profit for the company, dropped 24 percent, according to a statement Thursday. Betting from recreational gamblers in the Chinese enclave slipped 1.7 percent.
“The number of allocated tables to Wynn Palace is very disappointing,” said Jamie Soo, an analyst at Daiwa Capital Markets Hong Kong Ltd. “The reductions in bets indicates the continuous weak demand in the market, and the real recovery sign for Wynn and the gaming market in Macau has yet to be seen.”
The results disappointed investors who had sent the shares on a rally earlier this week after Las Vegas Sands Corp. founder Sheldon Adelson said the Macau market had bottomed out. Macau’s gaming industry has been in a two-year slump since the government in Beijing began cracking down on corruption, leading high rollers to cut back on their spending. Even with the slowdown, Macau casino operators are in the midst of a building boom. Las Vegas Sands Corp. will debut its $2.7 billion Parisian casino on Sept. 13.
Wynn Resorts said it expects Wynn Palace to get approval for just 100 tables by the local government while analysts expected as many as 250 tables when the resort opens Aug. 22. The company said it will move about 250 tables from its original resort in Macau to the new one to ensure the property has enough spots for would-be players. Macau is the only locale in China where casino gambling is legal. The local government determines how many gaming tables each casino may offer.
“We established a long time ago various scenarios where we can operate from 100 tables to 280 tables,” Wynn, the company’s chief executive officer, said on a conference call with investors Thursday.
Wynn Macau shares dropped 5.5 percent to HK$12.60 in Hong Kong trading Friday.
Last year, Wynn expressed frustration with the allocation process, saying on a conference call with investors that his new resort, the Wynn Palace, was designed to accommodate as many as 500 tables.
While betting declined last quarter, Wynn’s sales and profit in Macau rose because players lost a greater percentage of what they bet, the company said. Adjusted earnings in Macau before interest, taxes, depreciation and amortization rose 9.8 percent to $190.4 million. Revenue climbed 3.6 percent to $639.3 million.
Wynn posted total earnings and sales that topped analysts’ estimates. Profit excluding some items was $1.07 a share, the Las Vegas-based company said. That compared with the 98 cent-average of 12 projections compiled by Bloomberg. Sales of $1.06 billion beat the average $1.03 billion prediction.
Ebitda in Las Vegas was little changed at $122.3 million as casino and non-casino revenue slipped.