Inside Asian Gaming

INSIDE ASIAN GAMING | February 2008 18 as standing at 3.1% in Q4 2007. The company said this was at the top end of the expected range of 2.7% to 3.0%. As a measure of the underlying health of Wynn Macau’s VIP business, however, this is almost meaningless without a disclosure on discounts and commissions. Given that VIP turnover nearly doubled in the relevant period over Q4 2006, then a VIP win percentage at the bottom end of the range before discounts and commissions would have been distinctly alarming. The company added: “Table games drop in the mass market category was approximately $507.6 million during the period, a slight decrease from $513.8 million in the fourth quarter of 2006. Mass market table games win percentage (calculated before discounts) of 19.1% was at the upper end of 17% to 19%, and was higher than the 17.5% in the fourth quarter of 2006.” Even if Mr Wynn is sweating a little over Crown’s VIP challenge, he could hardly be expected to admit it in public as he has his company’s share price to think about. What is clear is that Wynn Macau has a lot more table capacity—and VIP capacity in particular—to come in the 75,000 sq. ft extension. Mr Wynn revealed during the earnings conference call that two more VIP areas would be opened within the current site before the end of 2008. He said: “There is quite a bit of additional capacity that comes on at the higher end of the spectrum at the end of this year, in the fall.” The company added in a statement that a second extension—the US$600 million Wynn Diamond Suites started in 2007—should be open in the first half of 2010. It will include 400 more luxury suites and more VIP capacity, including a members’ only casino in the base of the planned Diamond Tower. Mr Wynn may have sensed blood in the water in the Macau market, given that revenue at his rival Sheldon Adelson’s Sands Macao fell 16.7% in the same quarter, probably affected by new capacity coming in, including The Venetian Macao, which recorded revenues of US$500.4 million in Q4 2007. Sands Macao is chiefly configured as a mass-market casino with only a handful of VIP bedroom suites and limited potential for expansion. Mr Wynn may see this as the moment to stake his claim as the dominant force in VIP play on the Macau peninsula, and bring in extra mass-market traffic thanks to the glamour effect. Given that Crown Macau seems to have staked everything on the VIP trade though, a key question for the other operators is: ‘Should we fight on commissions, or should we focus on product quality and wait and see’? Whatever strategy individual operators take, there may come a point in the VIP turnover/commission equation where ‘VIP’ no longer signifies ‘Very Important Person’, but comes to signify ‘Very Indifferent Profit’ instead. Wynn Results