Inside Asian Gaming

Wynn Macau generated adjusted earn- ings for Q4 2007 of US$99.6 million before interest, taxes, depreciation and amortisa- tion—a 70.2% increase compared toUS$58.5 million in the fourth quarter of 2006. Growth despite the competition The company made much of the fact the improved performance was against a background of increased competition, with four properties opening last year. Many industry observers had expected Wynn Macau’s first extension, which opened on Christmas Eve, to have some impact on Q4 earnings. Goldman Sachs analyst Steven Kent said in a client note in January he expected a modest effect. The company said the extension added mass market and VIP capacity, providing approximately 75,000 square feet of gaming space. In the first phase of utilising this capacity, Wynn added 85 tables and 551 slot machines. The expansion, which also featured a new rotunda entrance, brings the casino resort’s total to 390 tables and 1,190 slot machines. Ron Kramer, president of Wynn Resorts, said Wynn Macau had increased total table capacity by around 40% and nearly doubled the slot offering. He added the opening of MGM Grand Macau next door— six days before the Wynn extension was inaugurated— was also expected to draw extra traffic to the “neighbourhood”. Is it possible though that in just seven days of operation before the Q4 reporting date of 31st December,theWynn extension alone contributed to the near doubling in Wynn Macau’s VIP turnover compared to Q4 2006? Robin Farley, an analyst at UBS, asked Wynn Resorts’ boss Steve Wynn exactly that question at an earnings conference call in early February. He wanted to know whether Mr Wynn had taken some of Wynn Macau’s mass tables out of circulation and reassigned them as VIP tables before the extension opening. In replying, Mr Wynn chose his words carefully. “We added to the mass market and we added to VIP. The expansion included two new VIP rooms and a general casino,” stated MrWynn,without specifying if the additional capacity he referred to in the first part of his sentence was added prior to the extension or a result of it. Another possibility is thatWynn grabbed new VIP business that quarter by improving incentives to its junket operators in a bid to compete with Crown Macau. When the canny Mr Farley asked a supplementary question at the conference callaboutjunketincentivesandcommissions, Mr Wynn stonewalled. “That’s proprietary information. I am not going to discuss it,”was his only response. Wynn isn’t giving much away in its balance sheet either. It quoted VIP table games win as a percentage of turnover 17 Wynn Results