Eagles still not "flocking" at Wynn's Macau casino

Wynn Macau, Mr. Wynn’s China-focused gambling unit, reported its first results since the 1,706-room Wynn Palace opened in late August. The verdict: business is ramping up slowly while some customers are being cannibalized from the company’s existing casino in Macau.

The company blamed the lackluster launch on construction work around the Wynn Palace, which hampered access to the premises. Mr. Wynn himself complained he couldn’t cross the street. “We had to take a very risky approach and dodge cars…I hadn’t expected that it would be at this stage when we opened in August. But there it is.”

What is more worrying than gamblers having to navigate construction debris is how the new resort casino is relying too much on high rollers rather than mass-market casual gamblers. Gambling revenue from VIPs at Wynn Palace was more than twice of that from casual gamblers. Morgan Stanley estimates VIP business, which earns lower margins, accounted for around half of the new casino’s earnings before interest, taxes, depreciation and amortization.

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The problem is there just aren’t enough high rollers

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While Macau as a whole has seen its third consecutive month of growth in gross gambling revenue in October after more than two years of decline, high-stakes gamblers have been scarce.

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Instead, they are turning up in nearby countries like the Philippines or Malaysia, which give them higher rebates and better anonymity.

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Wynn’s competitors, such as Sheldon Adelson’s Sands China, cater more to the mass market, with attractions like an Eiffel Tower replica. Melco Crown built a Batman-themed virtual-reality ride. Galaxy Entertainment provides a 350-ton artificial white sand beach.

The Wynn Palace, by contrast, seems to offer less for leisure travelers. A key visual attraction is a $33.7 million Jeff Koons floral sculpture. Expectations, however, are high as the stock has outpaced other Macau casino operators in anticipation of the new casino’s opening. Shares have fallen nearly 20% since September as those hopes have started to deflate, including a nearly 5% drop Thursday.

Eagles are nice, but flocks of smaller birds would be even better.