Wynn Resorts reported 3Q19 earnings and the headline was Macao. As J.P. Morgan analyst Joseph Greff wrote, “For the first time in a while, we feel that the tough Macau VIP segment is stabilizing/not getting worse, 
and mass growth there remains in attractive growth territory.” A renovation of part of Wynn Macau‘s casino floor is expected to improve results in late 2019. On the Las Vegas front, the opening of the new convention center is also expected to move the needle and “allow it to grow high-margin room revenues and capture more share of the group segment.” The reopening of the golf course is also anticipated to help drive table-game revenues.
“In Boston, which we view as a tertiary driver for the stock behind Macau and Las Vegas, the five month old Encore Boston Harbor is experiencing a slower than originally anticipated ramp on slot profitability, but other segments at the property are doing as expected,” Greff continued. Wynn’s Macanese cash flow of $323 million came up short of Greff’s predicted $330 million but easily exceeded Wall Street‘s consensus $310 million. Its market share in table games held steady at 14%, despite new competition from MGM Mansions and Morpheus Tower. By contrast, Encore Boston Harbor only delivered $8 million in cash flow, which implies a poor return on investment going forward.
VIP-derived revenues in Macao were down 41% but there was consolation in the form of mass-market slot winnings, up 8%. Wynncore, which had net revenues of $400 million, badly missed Greff’s cash-flow project, 
delivering $88 million. Bad-debt write-offs of $4.5 million played a role. Wynncore realized $86 million in table game revenues and $58 million from slots. Room revenues were up 5%, with renovations scheduled for 2020. Wynn “continues to refine marketing at its new Encore Boston Harbor property, in efforts to make the property more local,” including introducing a tiered loyalty card. As for Macao capital projects, Crystal Palace‘s first phase, costing $2 billion, won’t break ground until late 2021. Regarding its plans for the old New Frontier site, management remains tacit.
Credit Suisse analyst Ben Combes was far less sanguine than Greff, pointing to a series of revenue missing and adding, “We remain neutral on WYNN, given macro uncertainty, current [Hong Kong] protests and 
policy risk in Macau and China.” He added, “The Las Vegas 4Q outlook is strong, with our forward room rate survey, forward air capacity and convention attendance all positive.” He added that room-revenue improvement at Wynncore lagged the rest of the Strip’s 5%. Other priorities for the company include launching a New Jersey sports book and one in Massachusetts, should the Bay State legalize it.
In other Wynn metrics, Wynncore room rates ran to $306 at 88% occupancy. Table game wagering was flat but slot coin-in increased 9% for a win/slot/day of $335, well above industry average. Wynncore revenues were $399.5 million, while Wynn Macau took in $474 million (falling 18%) and Wynn Palace grossed $598 million, also down 18%. As for Encore Boston Harbor, it took in $175 million, with no year/year comparison available, for obvious reasons. Wynn curbed corporate expenses by 18% for a $26 million tally.
* Proposition DD, legalizing sports betting in Colorado, finally squeaked across the finish line, winning by 22,000 votes out of 1.4 million ballots cast. The new law will tax sports betting revenue at 10% and allow 
for mobile wagering. The high level of dissent is attributed to disingenuous opposition that painted Proposition DD as a tax increase. Winners include Full House Resorts, which was banking on the legalization of sports wagers. Said House Minority Leader Patrick Neville (R), “Black markets aren’t conservative and they aren’t good for Colorado. Bringing sports betting into the daylight, regulating it and leveraging it for the benefit of our water future is a common-sense approach.” Tax proceeds from sports betting will go toward to relief of water shortfalls.
* A Korean scandal suggests that Mohegan Sun‘s decision to include a K-Pop theme park in Inspire could be a double-edged sword.
* Make tracks to Carnegie Deli while you still can. The restaurant at The Mirage is shutting its doors next February. No replacement has been named, although fast food seems likely.
