Doubts over the future of US casino magnate Steve Wynn’s money-spinning Macau operations are growing as a scandal over his alleged sexual misconduct – which the tycoon denies – fuels concerns over his suitability to hold a gaming licence in the world’s richest gaming destination.
News that Wynn had resigned as chief executive and chairman of Wynn Resorts sent shock waves through the casino hub on Wednesday and led to speculation that gaming regulators in the former Portuguese enclave might follow the lead of their counterparts in the US states of Nevada and Massachusetts and open formal investigations into the mogul.
Billionaire Wynn has described the allegations against him as “preposterous’’ and blamed “an avalanche of negative publicity” driven by a non-fact-based “rush to judgment’’ for his decision to step down as head of the eponymous casino empire.
While casino regulators and officials in Macau have remained tight-lipped since confirming they met with senior management of Wynn Macau in the aftermath of the allegations being made public last month, it may only be a matter of time before awkward questions begin to be asked about operations in the highest-earning corner of the beleaguered tycoon’s global business empire.
The South China Morning Post has obtained access to an official report, which suggests Wynn’s run of bad luck could be set to continue.
The 2002 report contains the detailed final recommendations – later approved by the Macau government – of a special tender commission which granted Wynn one of the three main operating concessions which ended the 40-year gaming monopoly of casino king Stanley Ho Hung-sun.
An English translation of the Chinese version of the report, which was published in the official Macau government gazette in February 2002, was never made available online.
It strongly suggests – retrospectively – according to a gaming industry source, that Wynn may have failed to meet expectations the Macau government had that he could be a key driver of a culture shift which would see the city “transformed” from a purely gaming destination into a family oriented centre for mass market tourists.
The source, who requested anonymity, said fresh significance had been given to the report by the allegations engulfing Wynn and that there were question marks over what he described as a “significant reliance on VIP casino junket revenues over the mass market and non-gaming segments of the market to drive revenues” which had attracted the interest of those charged with the task of casino licence renewal.
The source added the report could “spark a formal bid to intensify and magnify scrutiny” of Wynn Macau’s operations in the wake of the sexual misconduct allegations which have not only forced the tycoon’s resignation as head of the gaming giant but led him to step down as finance chairman of the Republican National Committee, which promotes the policy platform of the US Republican Party.
The 2002 report laid out in simple terms the reasons for awarding Wynn Resorts a concession.
“ … because its controlling shareholder Stephen A. Wynn has made very remarkable achievements, one of which is that he managed to transform Las Vegas from a (purely) gambling destination into a family travel destination,’’ it stated.
“Wynn was not the only pioneer of doing this, but certainly was one of them. It has been a long dream of Macau residents that the enclave can turn into a family travel destination from a gambling destination.”
The report added that “innovation is a feature of the projects which Wynn has undertaken so far, and has received broad recognition. Wynn has made a decisive contribution to the growth of gross income of gambling operations at his casinos, and to the growth of the tourism industry”.
It had been assumed that the concerted push to wean Macau off its historic overreliance on the big-spending, mainly mainland gamblers brought to casinos by shady VIP junket operators came much later than 2002.
The most notable example of which came right from the top in 2014 when a call for economic diversification and more mass market, family driven tourism came during an official visit to Macau by President Xi Jinping at the height of Beijing’s ongoing anti-corruption drive and its battle against illicit outflows of capital during which Xi issued a clear message to the city to put its casino house in order.
With the Wynn Macau concession set to expire in 2022 – and those of the city’s other five casino operators either then or two years earlier – the bid for renewal will have to proceed without the man so heavily praised in the 2002 report.
Just days before the storm broke – on January 22 – Wynn told analysts that he expected the concession would be renewed without difficulty. “We have been given reason to have confidence that our businesses will continue after the initial concession expiration dates,” he said.
The Macau Gaming Inspection and Coordination Bureau – which regulates casinos – has not responded to questions about the scandal engulfing Wynn and what it means for the existing management team his resignation leaves behind.
Emailed requests for comment from Wynn Macau also went unanswered. Wynn Resorts president and non-executive director Matthew Maddox has replaced Wynn as chief executive, the company said.
The Post asked Macau’s anti-graft body, the Commission Against Corruption, about the status of an investigation that was under way into Wynn in 2014, which little has been heard of since. It said only that it would “not give comment on any inquiry regarding whether someone is being investigated”.
That probe was focused on the deal which secured a plot of land on the Cotai Strip where the newest of Wynn’s two casino properties – the US$4 billion Wynn Palace – now stands.
Among the allegations against Wynn in a Wall Street Journal report last month were that he paid US$7.5 million to an employee of Wynn Las Vegas who claimed the billionaire had forced her to have sex with him.
Wynn Macau has captured an outsize share of the city’s gaming market. According to UBS analysts, it has a market share of 17 per cent though its share of table capacity is only around 10 per cent.
Wynn Resorts generated US$683 million in operating profit from its Macau operations last year, more than double the US$285.7 million for 2016 with the benefit of a full year of Wynn Palace operations.
‘WYNNING’ START TO THE DAY
It wasn’t the best wake-up call I have ever had, and it certainly isn’t one I would like to be repeated.
I don’t know why the dull buzz and annoying glow of my mobile on vibrate only mode – which I would normally either ignore or quickly switch off with a badly aimed fist – made me answer, but I did.
An irritated and croaky “yes’’ was the best I could manage as I began to hope no one far away and important had died or that it was simply a wrong number.
The first inkling that this was no normal 7:30am call was the clipped female voice on the other end which was way too formal and carried a vague hint of menace.
Then came the moment every reporter dreads, when your blood runs cold and you see yourself out of a job and up before the editor or worse over a mis-transcribed quote you attributed to someone with the money, profile and connections to ruin you.
“Mr Fraser,’’ said the female voice, “I have Steve Wynn on the line for you.”
For a split second, I thought maybe he was so impressed by the manner in which I conducted an interview with him 12 hours earlier, that he was phoning to offer me a lifetime line of credit in his casinos.
Then it started – the longest and most expletive laden rant I have ever been on the receiving end of.
The casino mogul, who I knew had a reputation for chewing people out, wasn’t best pleased with the story I had written about him and he wanted me to know about it.
I cannot repeat the contents of Wynn’s foul-mouthed, 15-minute diatribe in a family newspaper – let’s just say it was exceptionally fruity.
About seven minutes in, I realised the neither the law nor lawyers had been mentioned, so I put my head back on the pillow sure in the knowledge that every quote I used from Wynn was accurate and let the man vent until the line went silent with a click.
He has never called me back.