Wynn gets first approval for new Macau casino

Galaxy Entertainment Group, Sands China and Melco Crown Entertainment have already built expansive resorts on Macau's developing Cotai strip, increasingly drawing tourists away from the former Portuguese colony's main peninsula. "It is not a slam dunk at this stage. There is still risk associated with all these big projects in terms of timing and costs" said Royal Bank of Scotland Group gaming analyst Philip Tulk in Hong Kong.

The next step would be securing labour, Tulk said, adding that Wynn would potentially have to compete with three other casino operators in building their properties, a challenge in Macau's already constrained labour market.

Shares in Wynn Macau were down 4.1 %, tumbling off early gains. MGM China was down 5.1 % and SJM had fallen 4.3 %, while Galaxy and Sands China both dropped more than 7 %. Hong Kong's main Hang Seng Index was down 3.4 %.

Wynn Macau, the second largest casino operator by market capitalisation in the enclave an hour from Hong Kong by ferry, said on Monday that it would pay us$ 193.43 million to the Macau government for use of land to develop its resort project.

Wynn said it had been given five years to complete development of the land area, which spans 51 acres and is set to become a resort containing a five-star hotel, gaming areas, retail, entertainment, food and beverage, spa and convention offerings. While the land premium disclosed is roughly double that paid by Galaxy for its us$ 2 billion Cotai casino, Tulk said, Wynn would easily be able to fund initial expenses because of its us$ 1 billion in cash stated at the end of June.

Melco Crown is also due to start building on a new Cotai site, but timing has not been confirmed. Sands China is also likely to start developing its last land parcel after the completion of a new casino in Cotai opening next year.

J.P. Morgan gaming analyst Kenneth Fong in Hong Kong said Wynn's new casino was likely to cost about us$ 3 billion. "The approval means Wynn can start initial soil testing and construction work. Based on the experiences of other projects in Macau of this size, we believe Wynn Cotai should be able to open by the end of 2015," he said.