Macau’s Secretary for Economy and Finance, Lionel Leong, today announced that the government will allocate 150 tables to Wynn Macau for Wynn Palace which is due to open on Aug. 22 this year.
It will then be allocated 25 more tables next January and another 25 tables on January 1, 2018. This amounts to a total of just 150 new tables- far below the numbers allocated to rivals Galaxy Entertainment's phase II and Melco Crown's Studio City, which both received 250. Wynn Macau had applied for 400 tables.
Wynn also received approval to transfer 250 tables from Wynn Macau to Wynn Palace, bringing the total table numbers to 400.
The move caught the industry a little by surprise as they had been expecting similar treatment as for Galaxy Phase II and Studio City, but Leong cited the government’s decision as being based on trying to stay within the confines of the 3 percent annual growth target in table games. The government has already issued 445 new tables in 2015 and 100 in 2016. This calls into question the number of tables that Sands China's The Parisian might receive, with the eventual allocation providing some insight into what operators can expect going forward.
Union Gaming has downgraded the stock for Wynn Macau to Hold with analyst Grant Govertsen saying that, while he thought it possible for Wynn Macau to achieve the firm's estimates over the next two years, "it does raise concerns on how an operator can ultimately get to where they need to be on a longer-term basis with only 150 tables on a $4bn+ investment... While we do think it is possible that the company could apply for more tables post-2018, we are more comfortable being on the sidelines for the time being and until we get more clarity on how future table allocations will be dealt with (for all operators)."
The 150 tables are also only being granted for the mass market, in line with commentary from MGM that its MGM Cotai resort will open with mass tables only. Wynn Macau could transfer some VIP tables from its peninsula property to Cotai, but had only foreseen around 60 VIP tables at each location.
“The projects that opened last year had a greater focus on family entertainment and non-gaming offerings, and - importantly in our view - a nod to the local community with on-property support for SMEs (small and medium-sized enterprises),” said Union Gaming.
Parisian Macau and MGM Cotai are in position to get a greater long-term total grant than 150 tables, said the brokerage in a note over the weekend.
Macau stocks rallied this week on slightly improved sentiment, with Sands China, Galaxy Entertainment and Wynn Macau all up over 9 percent.
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