Skift Take

Wynn is still keeping its sights set on Macau even as the local government has become more aggressive in limiting gambling growth and cracking down on corruption. If Wynn is looking for even more expansion in the long-term, Macau may not be the best place to look.

Las Vegas casinos tycoon Steve Wynn will get 150 gaming tables for his new $4.2 billion resort in Macau, just over a third of what his company applied for as the Chinese city signals it’s serious about limiting gambling growth.

Wynn Palace will be authorized to operate 100 tables when it debuts Aug. 22 in the world’s largest casino hub, with 50 more to be allocated in the following two years, Macau’s Secretary for Economy and Finance Lionel Leong said in a statement Friday. The government stipulated all the tables will be for mass-market players. The resort also received approvals for 1,145 slot machines.

The decision is based on the three percent table growth each year in Macau from 2013 to 2022, according to Leong in the statement. Wynn Resorts Ltd. “is satisfied” with the table allocation, spokesman Michael Weaver said in an e-mail statement Friday.

Macau’s government announced the table growth limit this spring in an effort to reduce the city’s reliance on gambling revenue and to shift away from high-stakes VIP gamblers amid Beijing’s crackdown on corruption. The government’s goal comes as the industry seeks to attract more tourists and recreational gamblers to the only Chinese city where gambling is legal.

Wynn Palace had sought 400 tables. Its allocation is less than the 250 tables Galaxy Entertainment Group Ltd. and Melco Crown Entertainment Ltd. obtained for their new Macau projects last year.

Wynn Macau reversed earlier gains to fall 0.2 percent by the close of trading in Hong Kong, after rising as much as 3.7 percent Friday. The Hang Seng index rose 0.8 percent. The Macau casino operator’s shares have jumped 43 percent so far this year through Thursday, while parent Wynn Resorts soared 48 percent over the period.

More Uncertainty

The allocation “does raise concerns on how an operator can ultimately get to where they need to be on a longer-term basis with only 150 tables on a more than $4 billion investment,” Union Gaming Group LLC analyst Grant Govertsen wrote in a note on Friday. He downgraded Wynn Macau Ltd. to “hold” from a “buy” recommendation.

The decision casts uncertainty on how many tables will be allocated to other new properties including those by Sands China Ltd. and MGM China Holdings Ltd., Govertsen wrote. While operators can still transfer tables from older properties to make up the numbers, the government’s “mass-only” mandate shows it wants to further restrict the VIP business, he wrote.

Slumping Market

Casino revenue in Macau has plunged 26-straight months, following China’s crackdown on corruption that has kept high-rollers away as tourist numbers dropped. Despite the slowdown, Macau casino operators are in the midst of a building boom.

MGM Cotai, scheduled to open in the second quarter of 2017, will be a “mass tables only” casino resort, MGM China Chief Executive Officer Grant Bowie told reporters on Tuesday. Last month, Sands China President Wilfred Wong said the company’s Parisian project, due to open Sept. 13, will allocate a minority of its tables to VIPs.

Running counter to the trend, Melco Crown’s Studio City, which opened October 2015 with just mass-market tables, is switching gears as it plans to open VIP rooms with gambling tables for high-stakes players as soon as this quarter.

Parent company Wynn Resorts had said July 29 it expected Wynn Palace to get approval for just 100 tables and that it will move about 250 tables from its current resort in Macau to the new one to ensure the property.

This article was written by Daniela Wei from Bloomberg and was legally licensed through the NewsCred publisher network.

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Tags: macau, wynn resorts

Photo Credit: Wynn's Macau Resort in Macau, pictured here, will soon be joined by the new Wynn Palace Resort. Wynn received only 150 tables as Macau limits gambling growth. WiNG / Wikipedia