Wynn's Macau growth endangered amidst sexual misconduct allegations

According to a Friday report by The Wall Street Journal, Wynn was reported to have engaged in sexual misconduct with company employees over decades, which prompted his resignation as the Republican National Committee finance chair. The alleged incident was referenced, in broad terms, in a lawsuit filed by Elaine Wynn, Wynn's ex-wife, against the casino mogul and the gaming company. 

The impact of the claims also heavily reverberated on Monday in Macau -the world’s biggest gambling hub- with Wynn Macau Ltd. shares slipping 6.5 percent in Hong Kong for the most significant drop in more than a year, with some of the unit’s bonds even falling the most since their issuance.

Wynn Macau is the growth engine for its U.S. parent, generating more than 70 percent of Wynn Resorts’ business. Last week, the casino operator reported better-than-expected quarterly earnings as a surge in revenue from Wynn Palace on Macau’s Cotai Strip overshadowed weaker results out of Las Vegas.

Wynn gained the most market share last year among casino operators with the resurgence of the elite gamblers, according to gaming data. Total gambling takings rose 19 percent in 2017, the first full-year of growth since 2013.

However, any fallout from the allegations could have a major impact on Macau. "Gaming regulators in Nevada and Massachusetts are looking into the accusations, and punitive actions in the U.S. could prompt Macau watchdogs to ramp up their scrutiny," said Wang Changbin, director of the Gaming Teaching and Research Centre at the Macau Polytechnic Institute. Upsetting the market by ousting an existing casino operator may be difficult, Wang added. Macau’s gaming law stipulates that the reputation of the operator and its controlling shareholder is considered in the bidding process for licenses.