Wynn Resorts Ltd have invested over $4.2 billion to develop its Wynn Palace casino resort which is scheduled to open on August 22 in the Cotai district of Macau. On the sidelines of a fire drill Friday, Macau’s Secretary for Economy and Finance, Lionel Leong Vai Tac said that 150 new to market gaming tables will be allotted to the casino – 100 pre-opening and 50 more to be released in lots of 25 each on January 1, 2017 and in 2018.
The gaming floor at the Wynn Palace would be able to accommodate as many as 500 gaming tables. Wynn reportedly requested 400. Industry analysts had predicted that the government would most likely allot around 200 to 250 gambling tables, but those numbers were not in line with the tables available under a market cap of 3% compounded growth per year beginning in 2013. According to government sources, the table count at the end of 2013 was 5,750. Parisian Sands is opening in September. MGM Cotai is opening in 2017, and Grand Lisboa Palace will open late next year or 2018.
Wynn Resorts had planned for the more realistic number. Steve Wynn recently announced in the company’s second quarter earnings report that it would most likely get approval for around 100 gaming tables pre-opening, and an additional number of tables after it opens. Neither the company nor government had announced before today how many tables Wynn had applied for.
In a late July statement, Harry Curtis an analyst from Nomura said “A 150-table deficit reduces the earnings power of Wynn Macau by $85 million in 2017 and lowers fair value from $92 to $83.”
Wynn Palace Cotai, the Parisian Macao and the MGM Cotai, all three multi-billion dollar casino resorts located in the Cotai district are expected to give Macau’s casino industry a much needed boost as gross gaming revenue has suffered a decline for twenty six consecutive months. The government has decided in recent times to restrict the number of gaming tables as it wants casinos to shift their focus from gaming to non-gaming facilities that will attract more families and change Macau’s image of being a gambling paradise.
Steve Wynn, billionaire and chairman of Wynn Resorts criticized Macau’s government in October 2015 for placing restrictions on the number of tables that the new casinos could operate. His remarks did not go down well with Macau legislators who stated that they would remain firm on their policies and expressed their regret over Wynn’s remarks.
Wynn Resorts has planned to redistribute about 100 tables from its Wynn Macau casino over to the Wynn Palace as a number of these tables are currently under-performing at the Wynn Macau. CLSA analyst Jon Oh stated that while the move to shift under-performing tables appears logical, it would also significantly reduce the footprint of the Wynn Macau business from some expectations. There are also concerns that the move could hurt the company’s overall operations in Macau as it could result in self-cannibalization. Wynn was optimistic in it’s earnings call, presenting well constructed arguments against such pessimism. What the operator may not have planned on though, is that according to local broadcast, print, and internet news outlet TDM, all 100 of the newly allotted tables are earmarked by the government for mass market gaming.
Earlier, Steve Wynn stated that Macau’s regulators do not give them any information in advance and Wynn Resorts would not be making any plans on assumptions.