GGRAsia – Wynn Boston sell off could aid Macau chances: Nomura

Wynn Boston sell off could aid Macau chances: Nomura

Apr 16, 2018 Newsdesk Latest News, Macau, Top of the deck, World

Were casino firm Wynn Resorts Ltd to dispose of its under-construction Boston Harbor project in Massachusetts the United States, it could improve the chances for the group’s Macau operation to get fresh gaming rights there when its current concession expires in 2022.

That is a suggestion in a Friday note from Japanese brokerage Nomura.

“By exiting Massachusetts, Wynn would send a signal to the authorities in Macau that the new management team is serious about remedying past ills, which could enhance their positioning heading into concession renewal conversations,” said the memo from analysts Harry Curtis, Daniel Adam and Brian Dobson .

That was understood to be a reference to the controversy over the Wynn brand name, in the light of allegations of sexual misconduct against the group’s founder Steve Wynn.

Mr Wynn has denied the claims, but resigned from the group in February. Macau’s casino regulator, the Gaming Inspection and Coordination Bureau, held a meeting with Wynn Macau Ltd management in late January after some of the allegations against Mr Wynn came to light, with the bureau noting in a statement that it took seriously the issue of “suitability”of its casino licensees.

In Massachusetts, where the state gaming regulator has launched its own enquiry into the claims against Mr Wynn, there have also been some calls to take the entrepreneur’s name off the circa US$2.5-billion scheme near Boston.

Wynn Resorts chief executive Matt Maddox told Bloomberg News that the company remains committed to finishing the Boston area casino but also wants to “maximise the value” of its assets “and mitigate risk”.

On Thursday the Wall Street Journal reported – citing people familiar with the matter – that Wynn Resorts was in “early” talks with U.S.-based rival MGM Resorts International for the latter to buy Boston Harbor.

“We believe that the Wall Street Journal commentary about Wynn possibly selling Boston Harbor to MGM is directionally correct,” stated the Nomura note.

The institution said that – even if the regulatory situation in Massachusetts led to a sale of Boston Harbor and a loss of of US$10 to US$15 per share in the value Nomura ascribes to the project, “the risk to Wynn’s Macau concession would also be lower, which would offset any lost value from Boston Harbor”.

MGM Resorts has been planning to open a casino in Springfield, Massachusetts, but might face regulatory obstacles if it also sought to have control of the Boston Harbor scheme. According to Massachusetts’ law, no party “shall be awarded, purchase or otherwise hold” more than one gaming licence in the state.

“This would likely necessitate a sale of MGM Springfield if MGM comes to an agreement with WYNN for [Boston Harbor],” said the Nomura team.

MGM Resorts – like the Wynn group – has majority ownership of a Macau gaming operation.