Casino boss Steve Wynn went off the rails on Thursday, verbally tearing a strip off Macau legislators for their “rather mystical policies” that Steve claimed make it impossible for casino operators to plan for the future.
Steve made the remarks during the analyst call for Wynn Resorts Q3 earnings report, which showed revenue down 27% to $996.3m, adjusted earnings down 39% to $279.9m and profit off 61% to $73.8m.
The downturn was driven by Wynn’s Macau casino, which saw revenue fall 38% to $585m and earnings cut in half to $163m. The market-wide slump in VIP activity drove the decline, with VIP turnover down more than half, while mass market table drop fell a more reasonable 13.7% and slot win fell 42.6%.
In Las Vegas, revenue fell 3.9% to $411m, largely driven by a 23.3% fall in table games drop. Gaming revenue was down 14.8% to $152m while non-gaming revenue rose 1.9% to $303.6m.
MAD AS HELL
Macau’s current problems are well known, and Steve said the Q3 numbers spoke for themselves. But Steve said the policies of the Macau government – particularly on the issue of new gaming table allocation – had become “a major issue” for casino operators.
Steve said the new $4b Wynn Palace property remains on track for a March 25 opening, but said much of the planning remains “a guessing game” due to the Macau government’s refusal to confirm how many new gaming tables the property will be allocated.
Steve cited the experience of Melco Crown Entertainment, who only last week got some idea as to the number of tables its new Studio City resort would receive when it opens on Oct. 27. Steve said it was “so preposterous” that a multi-billion dollar project would have been left with so little time to make the necessary adjustments.
With his voice rising, Steve lambasted Macau’s gaming table cap – which restricts the market’s total number of tables to 3% compound annual growth until 2022 – as the “single most counterintuitive and irrational decision ever made.” Steve said the only reason to impose such a policy was to “undermine and scuttle” the gaming industry and the government needed to “intervene and correct this aberration.”
Steve acknowledged that his tone of voice reflected his frustration, but said the table cap had “turned human resources planning inside out and upside down.” Without knowing how many tables the property would receive, Steve said it was impossible for Wynn to know how many staff to train.
Properly trained staff were crucial to the guest experience, which Steve called “the only controlling factor in the survivability of the hospitality industry.” Steve said Macau risked having its hospitality profile ‘severely compromised,” and it could take years – “maybe never” – to recover if it went down this road.
QUID PRO NO
Steve said Macau had transformed itself in recent years due to casino operators plowing $10b of investment – $4b of that by Wynn – into non-gaming amenities. Nearly yelling by now, Steve said operators had done so at the direct request of the government, but the only reason these transformations had occurred was because “the damn casino is the cash register!”
Steve warned that without a sufficient level of gaming options to attract customers, some of the casinos’ new non-gaming amenities would likely have to close. This would have “dire consequences in the community.”
Steve said Las Vegas’ transformation from casino town to entertainment hub wouldn’t have happened if there was a table cap and begged Macau’s government to “let us run our business based on our long experience” in other jurisdictions.
Tellingly, when Steve asked if the other Wynn execs on the call had anything to add, all one of them could say was: “You said it all, Steve.” That’ll do, Steve. That’ll do.