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Macau’s gaming regulator meets with Wynn Macau over allegations

Tuesday, 30 January 2018 06:28
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Macau’s Gaming Inspection and Coordination Bureau (DICJ) has met with representatives of Wynn Macau to discuss the implications of sexual misconduct allegations leveled against the company’s Chairman and CEO Steve Wynn.

The local gaming regulator confirmed the meeting via email on Monday, stating that it would ensure that key personnel and shareholders remained “suitable” to retain influence within the Macau concessionaire.

Although the DICJ gave no indication that any action would be taken against the company – which is a subsidiary of Wynn Resorts Ltd – the timing of the situation is unfortunate given that the Macau government is preparing to implement its new license renewal system for the city’s six concessionaires. The first of those licenses, belonging to SJM and MGM, expire in 2020 with Wynn Macau, Sands China, Melco Resorts and Galaxy Entertainment Group’s licenses expiring in 2022. The government hasn’t ruled out considering new applicants for a Macau gaming concession.

Wynn Macau operates two integrated resorts in Macau, including US$4.2 billion Wynn Palace which opened its doors in August 2016. Only last week Wynn Resorts announced a 29.9% year-on-year growth in revenue to US$1.69 billion for the three months to 31 December 2017, of which US$1.3 billion was contributed by its Macau properties. Total operating revenue for Wynn Macau grew 43.1%, with Wynn Palace enjoying a 65.6% increase in revenue to US$693.4 million.

Confirmation that the DICJ is looking at the allegations against Steve Wynn follow similar moves in Boston where the Massachusetts Gaming Commission has revealed it is reviewing the license it issued Wynn Resorts in 2014 to build the US$2.1 billion Wynn Boston Harbor.

“The Commission is now aware of and is taking very seriously the troubling allegations detailed in the Wall Street Journal article," said Director of Communications for the Massachusetts Gaming Commission (MGC), Elaine Driscoll, in a statement. “The suitability and integrity of our gaming licensees is of the utmost importance, and ensuring that suitability is an active and ongoing process. Consequently, the MGC’s Investigations and Enforcement Bureau will conduct a regulatory review of this matter to determine the appropriate next steps.”

Steve Wynn hit the headlines over the weekend following the Wall Street Journal article which alleged a “decades-long pattern of sexual misconduct.” It also alleged that Wynn had paid a US$7.5 million settlement to a former manicurist at Wynn Las Vegas after pressuring her into having sex in 2005.

Wynn has vehemently denied the allegations.

In a Monday note, analysts from brokerage Sanford C Bernstein said that Wynn Macau stocks will likely face “significant headwinds” in the short term.

“While we maintain a long-term positive fundamental view on the company, especially following last week’s Q4 results, the dynamics surrounding the allegations, the uncertainty surrounding the outcome and the negative news commentary that these events will continue to generate are likely to be a headwind on the stock,” Bernstein said. “Wynn Macau stock is likely to face a significant headwind and a short-term trade off and funds may rotate out of Wynn Macau into other competitors in the near term (in particular Sands China due to US investor sentiment and Galaxy which is perceived to operate in a similar high-end market segment).”

Wynn Resorts filed an update with the SEC late Monday confirming an earlier announcement that it has formed a Special Committee of the Board comprised solely of independent directors to investigate the allegations against its Chairman. The Special Committee is chaired by Patricia Mulroy, a member of the board’s corporate governance and compliance committees and a former member of the Nevada Gaming Commission.

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