Deutsche Bank Lowers Forecasts for Wynn Resorts

Deutsche Bank analysts have trimmed their 2018Q2 forecast for Wynn Resorts, mainly due to lower-than-anticipated VIP volumes, increasing competition, and the impact of the World Cup.

“While we do not believe the World Cup or Euro Cup have had a meaningful influence on historical results, our checks indicate the proximity of this year’s World Cup (Russia), relative to the 2014 event in Brazil, could cause some VIP softness in June as junkets arrange trips for players,” said analysts in a note on Monday.

Additionally, Deutsche Bank noted that increased efforts from other operators in the VIP segment may also threaten VIP revenues for the operator, “though we don’t believe there to be any indication of more aggressive junket treatment in the market,” it added.

The junkets are the main driving force for high-end gamers in Asia, helping arrange trips and organize finance from high net worth individuals, in particular from China.

Macau has historically been reliant on revenue from these high rollers, as they are known, although the government is keen to see the gaming hub transform into a more family-friendly destination.

For the operators, the high rollers are less profitable as they tend to be offered free hotel rooms and other perks in return for their custom at the tables. (AGB)