Wynn Macau bets on concerts as a winning strategy

After missing the mark with its quarterly earnings, the Macao casino operator is building a big entertainment complex as an added draw for tourists

Key Takeaways:

• Disappointing gaming results from its premium VIP lounges weighed on second-quarter earnings
• The new arena at the Wynn Palace, due to open in 2028, is meant to capitalize on high-profile events as a driver of non-gaming revenue

By Lee Shih Ta

Macao’s gaming industry has been hitting a summer jackpot, with tourists attracted by a busy concert calendar and easier access to visas.

In July, gaming revenue jumped 19% to 22.13 billion Macao patacas ($2.73 billion) from the same month a year earlier, a post-pandemic high and the best monthly tally since 2019, according to official data. That followed a first-half rise of 4.4% to 118.8 billion Macao patacas.

The winning streak has prompted many investment banks to raise their financial projections for the industry, leading some investors to wager that revenue growth could top 7% for the whole year.

However, one casino operator has not shared in the good fortune, instead delivering underwhelming results. Wynn Macau Ltd. (1128.HK) reported revenues of $883 million for the quarter ending on June 30, 0.2% less than in the same period of 2024. Meanwhile, the company’s adjusted property EBITDA fell 4.2% to $254 million.

By contrast, two major rivals played a winning hand. At MGM China (2282.HK)second-quarter revenue rose 9% to $1.1 billion and adjusted EBITDA gained 2.5% to $300 million. Meanwhile, Sands China (1928.HK) logged a 2.5% revenue jump to $1.79 billion and a 0.9% rise in adjusted property EBITDA to $566 million.

Indeed, Wynn Macau’s whole first-half performance was cause for concern. Revenue fell 7.1% to $1.75 billion, while its EBITDA dropped 7.2% to $506 million in the six months to the end of June.

The earnings miss dealt a blow to investor confidence. On the day after the results came out, the company’s share price sank 7.47% to HK$6.28. But the stock had still risen 21.24% over the past six months, benefiting from an improved outlook for major gaming stocks in general.

Falling win rates

Since the city relaxed visa rules for visitors, a program of concerts has attracted a stream of tourists who have also placed their bets in the casinos and gambling halls. Welcoming more tourists is one thing but getting them to part with their money for activities other than gambling is quite another.

Per-capita spending by tourists, excluding gaming, fell 12.3% to 1,950 Macao patacas in the second quarter, although it grew 4.6% to 18.25 billion Macao patacas for the year to date, according to official statistics.

Wynn Macau scooped up $742 million in revenue from its gaming business in the second quarter, a year-on-year rise of 2.2% and accounting for 84% of total turnover. However, the increase was accompanied by a drop in win rates. Its winnings from VIP lounges as a proportion of turnover edged down to 3.19% in the second quarter from 3.69% in the year-earlier period, compared with a historical range of 3.4% to 3.6%. The win rate in the mass market areas came in at 20.2%, also below last year’s 22.4%.

For the company’s flagship Wynn Palace, where gaming supplies a bigger revenue share, the win rate for the VIP lounges was only 2.86% in the second quarter, much lower than the 4.1% last year. The falling rates for VIP lounges was the primary drag on second-quarter revenue, to the tune of around $13 million, the company said.

Meanwhile, MGM China registered a win rate of 3.2% for its VIP lounges and 24.8% for the mass market in the second quarter.

Betting on the concert business

In the increasingly competitive gaming market, the company is hoping to shift the odds in its favor with a big investment in facilities, including a foray into the business of hosting high-profile concerts.

The company outlined plans to spend between $200 million and $250 million in Macao this year, mostly on refurbishing Wynn Macau’s towers and expanding the exclusive VIP areas at its Wynn Palace resort.

A major event and recreation center is also planned for the Wynn Palace, with construction set to be completed in 2028. The complex is intended to serve as a major venue for the city, offering big-draw concerts, exhibitions and other entertainments.

Macao’s gaming revenues this year have proven the positive impact of such attractions, boosted by a combination of summer tourism and popular concerts. Wynn Macau has also benefited from concerts hosted by Galaxy Entertainment (0027.HK) and at its Venetian Macao property.

Craig Billings, the CEO of Wynn Resorts, said the investment in the event center was a strategic move as the firm engages in daily “hand-to-hand combat” for Macao market share.

Wynn Macau is currently trading at a price-to-earnings (P/E) ratio of 11 times, compared with MGM China’s 13.3 times, Galaxy Entertainment’s 20.4 times and Sands China’s 19.9 times, reflecting investor caution about its growth potential. If the company can stabilize its gaming win rates and upgrade its entertainment offering, it could narrow the valuation gap. Under such a scenario, the relatively low price point right now could present a buying opportunity for investors.

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