November 11, 2013 -
Steve Wynn did it to Philadelphia again.
For the second time in three years, he talked about opening one of his luxurious casinos in Philadelphia and then said fugetaboutit. On Monday, Wynn unexpectedly pulled his application to win Philadelphia’s second casino license leaving five contenders.
In a statement, Wynn’s company pinned the decision on the recent vote in New York allowing commercial casinos in that state, and casino market conditions in Philadelphia.
Those may be valid reasons but neither development can be called a surprise, so it does make one wonder why those are now determinants in the Wynn calculus
The New York casinos have been discussed for a long time and it’s been obvious that it was going to happen. The casinos will be in upstate New York for the time being and won’t happen in New York City for several years.
The revenue figures in the Philadelphia area have reflected the market is maturing, but they’re still solid numbers for the better operators.
OK, so SugarHouse Casino, Wynn’s potential close neighbor to the south on the city’s waterfront, is planning an expansion that should double its gaming space. Again, no surprise on that one.
What can be said about the New York development is that it can be argued it would have more impact on Wynn than the other five Philly contenders. Wynn’s casino-hotel was being planned as part-regional casino and part-destination urban resort.
In their pep talks over the last few months, Wynn executives and representatives made reference to the database of Wynn customers, presumably in the East, who could be lured to Philly for a closer-than-Vegas Wynn experience. And maybe upstate New York casinos in the near-term and one or two in or close to the city take the air out of that balloon.
There are other moving parts to the Wynn situation that may have some bearing.
For one, Wynn’s company is making gazillions in Macau, as is Sheldon Adelson’s Las Vegas Sands. Try this statistic on for size — in October, Macau casinos made more money in one month than Atlantic City casinos made all last year. Clearly, domestic casino development just doesn’t show the return-on-investment of Asian plans.
And Wynn, in a recent financial conference call, expressed surprise and frustration with the zealous investigatory vetting in Massachusetts that drove Caesars Entertainment out of the running for a Boston casino. Wynn also happens to be considering building in Massachusetts but he just may have had a belly-full of nit-picking U.S. regulators and carping media raking casino companies over the coals.
Here is what Wynn had to say in that October conference call that sheds light on his view of domestic versus foreign business dealings.
“You know that we are primarily an Asian company,” Wynn said. “Thank goodness, and God bless that, and we intend to stay an Asian company primarily.”
Over a month ago, it was reported that Wynn had a partnership to use one of Caesars Entertainment’s licenses in New Jersey to become part of Internet gambling in that state. But there hasn’t been much talk about that lately with online gaming set to launch there in a few weeks.
However, two Atlantic City casinos may change hands sooner rather than later. The Atlantic Club just filed Chapter 11 and is seeking bidders, and there is renewed reports that Revel is in play. In both cases, no Internet partnerships have been announced, presumably to keep the slate clean for a new owner.
Wynn’s casino in Philly reportedly would have cost more than $925 million. The Atlantic Club may go for less than $15 million and Revel will certainly be sold for a fraction of the $2.6 billion of its original cost. And in both cases, those casinos come with the extra value of an Internet gambling license.
So it is possible that if Wynn does have any interest in a domestic operation outside of Las Vegas, it could be in New Jersey where he gets the opportunity to explore the Internet gaming frontier.
Statement from Wynn Resorts regarding its developments in Pennsylvania
Las Vegas, November 11, 2013 — The Wynn Resorts Board of Directors recently met to carefully examine the feasibility and opportunities associated with the company’s domestic development in Philadelphia, Pennsylvania. At this time, the Board has decided that the best course for the company is to pursue business opportunities elsewhere.
The board took a host of factors into consideration, including the Philadelphia market performance over the past year and the competition which will result from the recent approval of gaming in the State the New York. Consequently, the company will withdraw its licensing applications in Pennsylvania.