Wynn’s Macau expansion at stake as chairman’s sex scandal roils parent
THE REACTION to sexual harassment allegations swirling around Steve Wynn is muted so far in Macau. As investors await how the drama unfolds in the US, Wynn Resorts Ltd.’s operations in the world’s biggest gambling hub remain the key to the company’s future.
Shares of Wynn Macau Ltd. slipped as much as 6.5% in Hong Kong on Monday, less than the 10% plunge in the parent company’s stock on Friday. The company is under pressure after the Wall Street Journal reported that the casino magnate had engaged in multiple instances of sexual harassment, which founder Wynn denied.
With Wynn Resorts facing investigations in the US and calls for Steve Wynn’s ouster, here are some reasons why the scandal will be a big deal for Macau too.
CROWN JEWEL
Wynn Macau is the growth engine for its US parent, generating more than 70% of Wynn Resorts’ business. Last week, Wynn Resorts reported betterthan-expected quarterly earnings as a surge in revenue from Wynn Palace on Macau’s Cotai Strip overshadowed weaker results out of Las Vegas.
MACAU RESURGENCE
Business is booming in Macau as high rollers have returned to the territory after a government crackdown. Wynn gained the most market share last year among casino operators with the resurgence of the elite gamblers, according to gaming data. Total gambling takings rose 19% in 2017, the first full-year of growth since 2013, and analysts are optimistic about the gaming market in 2018.
INCREASED SCRUTINY
Any fallout from the allegations could have a major impact on Macau. Gaming regulators in Nevada and Massachusetts are looking into the accusations, and punitive actions in the US could prompt Macau regulators to ramp up their scrutiny, said Wang Changbin, director of the Gaming Teaching and Research Centre at the Macau Polytechnic Institute. Upsetting the market by ousting an existing casino operator may be difficult, Wang added. Macau’s gaming law stipulates that the reputation of the operator and its controlling shareholder is considered in the bidding process for licenses.
FOUNDER’S FATE
Some investors are calling for the company to oust Steve Wynn, raising the prospect of a volatile transition period. Bloomberg Intelligence analyst Margaret Huang says possible successors to the 76-year-old casino magnate include Linda Chen, chief operating officer of Wynn Macau. Wynn cited Chen as one of the company’s executives fit to take over when asked about a potential replacement in 2011.
ASIAN FALLOUT
The repercussions could be felt beyond Macau. Japan is opening up to casino resorts, and government officials are already sensitive to negative perceptions about the industry as they consider regulations and licenses for casino operators. —