Set to open next Monday, the Wynn Palace is founder Steve Wynn’s most ambitious project to date. With a $4.2 billion price tag, the property boasts a slew of lavish amenities, including 1,700 luxury guest rooms, a massive lagoon with a gondola ride, and even a $33.7 million sculpture.
But not all has gone as planned with the new casino. Last month, regulators issued Wynn only half the of the 200 table gaming permits he requested. The government has since compromised and agreed to issue an additional 50 permits spread out over the next two years.
By far the biggest challenge Wynn faces in Macau is the big downturn in the casino market. Casino revenues in the small peninsula on China’s southern coast have plunged for 26 straight months. In that timeframe, the market has fallen by 33% to $29 billion — still four times the size of Las Vegas’ strip.
Referring to the region’s meteoric growth rate and subsequent slowdown, Wynn noted that things are simply back to historical norms. From SF Gate:
“What took place here in previous years was an anomaly,” said Wynn. “The amount of revenue, the rate of growth was unprecedented and historic and in many cases not just extraordinary but outrageous.”
Growth now is “representing more normal patterns of human behavior, and that applies as well financially.” Current opportunities are “wonderful,” said the 74-year-old CEO of Las Vegas-based Wynn Resorts Ltd.
Much of Macau’s slowdown is due to Chinese government intervention. Regulators want to curb money laundering and other social evils by other unscrupulous Chinese businessmen:
China’s Communist Party leaders want Macau, the only place in China where casino gambling is permitted, to give up its reliance on so-called VIP gamblers, who often have been corrupt mainland Chinese government officials or executives at state-owned companies. Instead they want more “non-gaming” attractions to lure middle-class families and help turn the city of 567,000 into a prominent Asian tourism destination with a more sustainable growth model.
Worried over capital flight, Beijing has been tightening scrutiny of VIPs suspected of using Macau as a money laundering hub to spirit money out of the mainland via casino junket operators — shadowy middlemen who help skirt Chinese capital controls by lending money to gamblers.
Thus far, investors have remained bullish about the casino project, as Wynn Resorts shares currently sit just a few percentage points off their yearly highs. After a huge downturn that saw WYNN shares lose 75% of their value from their 2014 peak, the stock has rebounded strongly in 2016, up 46% year-to-date.