The fallout from the Wall Street Journal article regarding Wynn Resorts’ founder and CEO Steve Wynn’s alleged pattern of sexual assault has already been serious.
Wynn was forced to quit his position as US Republican Party National Committee finance chair, an investigation has been launched by the Massachusetts Gaming Commission, and the company’s stock prices were hammered on Monday.
But does the scandal also mean that Wynn Resorts is now effectively out of the highly competitive race to gain a license in the anticipated Japanese IR market?
As recently as September last year, Steve Wynn was talking about his interest in the Japan. He told the Nikkei Asian Review that “Tokyo, Osaka, Yokohama” are places that a Wynn resort could potentially be built, indicating that the smaller, regional locations were of no interest to his company.
However, it hasn’t been clear precisely how serious Wynn’s interest is about Japan. An agent of Wynn Resorts attends some IR-related events in Tokyo, but no permanent office has yet been opened and practical actions have mostly taken place beneath the surface, if they exist at all.
At any rate, the sexual assault allegations against Steve Wynn are being reported widely in Japanese-language newspapers.
Wynn has issued a denial, which reads in part: “The instigation of these accusations is the continued work of my ex-wife Elaine Wynn, with whom I am involved in a terrible and nasty lawsuit in which she is seeking a revised divorce settlement. Elaine has explicitly threatened to slander and destroy me and I am surprised that the media is allowing itself to be used to advance this agenda.”
Implied in this denial is the notion that the Wall Street Journal published this explosive story about the powerful billionaire without carefully vetting the many accusers. This seems to be a low-probability scenario.
In the wake of the scandal, Asia Gaming Brief spoke to a close observer of the IR issue who frequently talks with Japanese politicians and bureaucrats. According to this source, “I think it will have an impact. The Japanese government has made it clear that having a clean system is of critical importance, and a company whose CEO has these kinds of allegations against them—it’s hard to imagine how the Japanese government would not pay attention to this.”
However, that opinion is not universal. Toru Mihara, an academic expert closely involved in shaping Japan’s IR policies, separately told Asia Gaming Brief, “Sexual harassment is a problem but is not related to integrity which shall be the core focus of a license. Mr. Wynn may have personal liability for this scandal, but this should have nothing to do with the corporate licensing matter.”
Both sources agreed that Wynn Resorts would be far better off within the Japanese market if Steve Wynn were quickly cut loose and a new CEO put in his place.
Asia Gaming Brief’s direct inquiries to representatives of Wynn Resorts went unanswered as of the time this story was filed.
Stock to face headwinds
On a wider view, the negative news surrounding Steven Wynn is also likely to generate negative headwinds for the company in the short term, noted analysts from Bernstein on Monday.
Wynn stock prices fell more than 10 percent following the news on Friday. Union Gaming downgraded its view on Wynn Macau to Hold.
The brokerage said part of the reason is due to “uncertainty surrounding recent allegations against the company’s Chairman and CEO and subsequent parent board investigation announcement.”
Bernstein noted that the negative news commentary will generate headwinds on the stock, with funds likely to rotate out of Wynn Macau and into other competitors in the near term, but said it maintains its long-term positive fundamental view on the company.
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