Wynn winning; Flyover Country keeps Caesars aloft

Wynn Resorts reported 3Q20 results yesterday and the headline item was Macao, where operating results were “soft” but “encouraging,” despite “negative to apathetic investor sentiment,” according to JP Morgan analyst Joseph Greff. Mass-market wagering was up 40% and credit issued by third parties rose to as much as 30% of pre-Covid-19 levels. Results reflect continued, albeit gradual, progress, from IVS resumption and the return of visitation to Macau post Golden Week which, to us, show genuine pent-up demand and an inflection point there,” wrote Greff. Profits in Las Vegas overshot his expectations, as casinos revenues declined only 25%, even with restricted capacity. And Encore Boston Harbor, “generated upside on strong slot revenues, which were up year-over-year, though some of this strength will be impacted starting this weekend as the casino hours will be curtailed on COVID-19 related state mandates.”

Best of all, the company busted out Wynn Interactive, an i-gaming company and joint venture with former shareholders of Britan‘s BetBull. The company has invested $80 million, targeting nine states and keeping an eye on another seven. If all 16 come through, that would give Wynn Interactive access to 58% of the U.S. populace. It’s already live in New Jersey, with Colorado, Michigan and Indiana coming online by year’s end. “We continue to believe that Macau will be the primary driver of the stock but it now has other emerging drivers,” said Greff, referring to the new revenue propellant. Still, a recovery may be long in coming. Greff lowered his cash-flow target for WYNN significantly for next year (Las Vegas and Macao 31% down, and Everett 16% up. Looking ahead to 2022, VIP gambling revenue in Macao is predicted to fall 27% while mass-market and slot play lag 2019 by 20%.