VIPs are cautious as Wynn Resorts’ table games win suffers



VIP table gaming

Wynn Resorts’ (WYNN) table games results in Macau are segregated into two distinct reporting categories, the VIP segment and the mass market segment.

Wynn Resorts’ (WYNN) VIP table games drop in 4Q14 was $20.7 billion. This was 39.9% lower than the same quarter in 2013. Drop is the amount of cash and net markers issued that are deposited in a gaming table’s drop box.

WYNN’s VIP table games win as a percentage of drop for the quarter was 2.8%. This is below 2.9% experienced in the fourth quarter of 2013 but within the expected range of 2.7% to 3.0%. Table games win is the amount of drop that’s retained and recorded as casino revenue.

The above chart shows the quarterly trend of WYNN’s Macau VIP table win. For the fourth quarter of 2014, VIP table win stood at $580 million, down 42.3% year-over-year.

The average number of VIP tables decreased to 244 units in the fourth quarter of 2014, from 273 units in the prior year’s fourth quarter. This is due to a renovation on a portion of the casino floor. Completion of this renovation is expected before the Chinese New Year.

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Macau’s VIP gaming revenues have been negatively impacted by the ongoing anti-corruption campaign in China. This has also negatively impacted other casino players operating in the Macau region, including Las Vegas Sands (LVS), MGM Resorts (MGM), and Melco Crown Entertainment (MPEL). The VanEck Vectors Gaming ETF (BJK) has ~ 25% exposure in these companies, including WYNN.

Key takeaways from the 4Q14 earnings call

Stephen A. Wynn, chairman and CEO (chief executive officer) of WYNN, said, “We also are opening in a week or so, the new area of the casino in Macau that is dedicated to VIP business. . . . So to that extent, I think February is going to see an improvement of some sort, and I don’t need to quantify that, but I expect that we will see a better result comparing to the previous months.”


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