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Wynn Confident Despite Galaxy Launch

Posted on May 21st, 2011

“I think that Macau market growth rate for the first quarter will be exceeded in the future because of Galaxy.” This was the bold statement of the widely renowned U.S casino gambling mogul Steve Wynn — CEO of Wynn Resorts Ltd and Wynn Macau Ltd – in connection to the grand opening of the Galaxy Entertainment Group Ltd’s $2 billion casino property on this weekend. The gambling tycoon who is one of the six U.S casino operators given privilege to operate in the gambling mecca, is confident on his predictions that the future revenues in the aftermath of the Galaxy’s opening would soar high and easily eclipse the outstanding profit returns of this year’s first four months of operations.

Galaxy Macau will boast 450 gambling tables and an approximate number of slot machines could range to 1,500. It will also have a 40,000 square ft. swimming pool and an artificial beach complete with tons of white sand. Macau, which now owns the distinction as the only place in mainland China where gambling is ruled to be legal, amassed a $10 billion gaming revenue rate in the first quarter of the year. The whopping amount has already matched and overtook the total gambling revenue of America’s gambling hub Las Vegas for the rest of the year 2010, even four times greater than Vegas’ total cashed profits. The 69-year old gambling advocate denied the labeling of the Wynn Macau as a VIP oriented gambling casino. Wynn noted that the casino’s tremendous reception from the mainland China’s middle class societies was a testament of how his owned casino isn’t just one for the big names. “We just have a lot of VIP business, but we also have the best win per table in the general casino in Macau. Of all 33 casinos, the best general casino is the one you are standing on top of,” he said.

Wynn also downplayed the thoughts of losing a significant share of the market now that a lot of new rivals are mushrooming down his niche. He said it was a thing that doesn’t bring him worries knowing that his company has already established a pretty decent share of the market’s money. Other popular casino companies operating in the China’s gambling region are SJM Holdings Ltd of Hong Kong magnate Stanley HO and another American originating company, the MGM Resorts International. The three gambling companies are waiting for the government’s green light to operate on the emerging Cotai strip. Wynn has been confident about the positive response of the government saying that the approval of the concession wouldn’t take any longer. The government is hoping that the deal with the casino companies will revolutionize the perception of Macau as not just a pure gambling region but also a global travel and leisure hotspot. The Cotai strip is a barren and dusty area in Macau readied for development.

Among the few who have already tapped the potential of Cotai are Sands China and Melco Crown, who are already operating casinos in the area. Galaxy has also recently opened a new 550,000 square meter resort early this week. Wynn said that looking for new opportunities in the gambling region was consistently on his agenda but noted that he found it hard to pinpoint specific target markets. “We are always looking for new opportunities. We feel that we are an Asian company and we are now mature. We are all grown up, we have a capital structure and balance sheet that allows us to go anywhere and do any project of any size easily,” he said. The casino company has had shares amounting to $17 billion, an increase of 130 percent from the past year. On the other hand, the percentage was partially downed by 6 percent after investors cashed out after a strong rally in the early goings of May.

The revenue growth in the gambling region is expected by analysts but they paid more attention particularly on Wynn Macau’s ability to stand out over its counterparts like Sands China and SJM and others. “Although Wynn Macau’s premium brand name and service quality have consistently secured it superior table wins and project returns over its competitors, we believe the stock looks fully valued,” the U.S. bank said in a note.