Wynn Expresses Interest in New York Casino License as Macau Recovery Lags
Wynn Resorts (NASDAQ:WYNN) is in fact interested in opening an integrated resort in New York City, confirming as much on its first-quarter earnings conference call late Tuesday.
In response to a question from UBS analyst Robin Farley on the call, new Wynn CEO Craig Billings notes the company is interested in any city that can accommodate the scale the operator seeks in new projects, but he was mum on further details.
Yes, we are interested in any gateway city that is conducive to the scale and quality of development that Wynn Resorts does” said Billings. “So we are interested in New York, and we are active there, but not in a position yet to talk about anything in particular.”
The Las Vegas-based operator has long been rumored to be mulling an attempt to enter the largest US city, but yesterday’s comments by Billings represent the first overt confirmation to that effect from the company.
What Wynn Could Encounter in New York
While it’s likely to be years before ground breaks on a New York casino-resort, the lay of the gaming expansion land in the city is actually straight forward.
Currently, the two New York City-area casinos — Resorts World New York City in Queens and MGM’s Empire City Casino in Yonkers — are slots-only venues. The state’s 2023 budget likely paves the way for those venues to become full-service casinos with table games and retail sportsbooks, as well as providing for a third license for a yet-to-be-determined operator.
Previous speculation highlighted Bally’s (NYSE:BALY), Las Vegas Sands (NYSE:LVS) and Wynn as the likely competitors for the third and final New York casino permit. Last week, Bally’s was selected to develop an integrated resort in Chicago. It’s not clear if or how that project will affect the company’s New York ambitions.
In recent months, rumors heated up about Sands entering the Big Apple with reports emerging about possible talks between the operator and New York Mets owner Steve Cohen regarding a casino in the Citi Field area.
It’s not clear to which gaming company the third New York casino license will be awarded, but that operator is likely to encounter considerable debate pertaining to the location of the new venue. As things stand today, Brooklyn, Manhattan and Westchester County are unlikely to welcome a gaming property, leaving just three of the five boroughs — the Bronx, Queens and Staten Island — as possible destinations.
For Wynn, Expansion Outside of Macau Essential
In the wake of dismal first-quarter results that were caused by weakness in Macau, Wynn is enduring a spate of analyst price target cuts today. Ongoing sluggishness in the Chinese territory, which typically accounts for the bulk of Wynn’s earnings and revenue, is overshadowing impressive showings at Wynn and Encore Las Vegas as well as Encore Boston Harbor.
“The bad news is that Macau is still a total mess due to China’s zero-case count policy with no end in sight. While the Macau waiting game continues to be painful, we continue to have faith that once the Chinese government eventually relaxes their harsh COVID policies, demand levels will return to normal very quickly,” said Stifel analyst Steven Wieczynski in a note to clients.
He rates Wynn “buy” with a $112 price target, down from $139.
While integrated resort projects take years to get off the ground, such expansion could be pivotal to Wynn’s long-term efforts to diversify a Macau-heavy revenue stream. To that end, the company said earlier this year it’s planning a gaming venue on Al-Marjan Island in the United Arab Emirates.
On a related note, HKS Architects said yesterday it’s been appointed architect for the Wynn UAE venture. The design firm has extensive casino-resort experience, having served as the architect of the Venetian Macau, Palazzo Las Vegas and Atlantis Paradise Island in the Bahamas.
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