Wynn Gains as Tourists Boost Macau Gaming Revenue a Third Month

(Bloomberg) -- Wynn Resorts Ltd. led casino stocks higher after the Chinese gambling enclave of Macau reported a third straight month of revenue gains in October, boosted by visitors during the week-long Golden Week holiday.

Gross gaming revenue rose 8.8 percent to 21.8 billion patacas ($2.73 billion), according to Macau's Gaming Inspection and Coordination Bureau. That compares with the median estimate for a 5.5 percent advance in a Bloomberg survey of seven analysts. The growth builds momentum in reversing a 26-month slump as the world's biggest casino hub transforms itself into a destination for families.

Wynn jumped as much as 5.5 percent, the biggest intraday increase since Sept. 12. Las Vegas Sands Corp. climbed 2.8 percent, and MGM Resorts International was up 3.1 percent.

“The strong October number is more due to the new projects, which will attract an increase in tourists and mass gamblers,” said Aaron Fischer, an analyst at CLSA Ltd. before the numbers were released.

Macau, the only place in China where casinos are legal, has opened new billion-dollar resorts that target casual gamblers instead of the high rollers that form the bulk of its gambling customers. Almost a million Chinese tourists visited the former Portuguese province in the first seven days of October for Golden Week, the most in at least a decade.

“The strong beat of the monthly gaming revenue is very likely due to the decent performance of both the mass market and the VIP business, and it will improve market sentiment,” said Richard Huang, a gaming analyst from Nomura International. The new casinos will continue to boost the market the rest of the year, he said.

Macau casino shares also gained after the data was released. MGM China Holdings Ltd. rose 3.3 percent, while Sands China Ltd. climbed 2.8 percent. The Bloomberg Intelligence Macau Gaming Index gained 1.7 percent. The benchmark Hang Seng index rose almost 1 percent.

The better-than-expected results show Macau is at an inflection point, wrote Union Gaming analyst Grant Govertsen in a note Tuesday. He forecasts the city's gaming revenue will grow 11 percent in November.

The gains also suggest the impact of last month's detention of 18 Crown Resorts Ltd. employees in China is “non-existent” for Macau casinos, wrote Govertsen. Chinese authorities detained the Crown employees for gambling-related crimes following warnings to the Australia casino operator last year to halt efforts to attract high rollers from the mainland to gamble overseas.

After the detentions, the head of the Macau gaming regulator Paulo Chan said the arrests won't affect Macau's casinos after he met with the city's six casino operators, government-owned broadcaster Teledifusao de Macau reported Oct. 27.

Operators based in Macau have not been investigated so far as they have “closer communication ties” with Chinese government officials and a better understanding of how to conduct business in mainland China, said Sudhir Kale, founder of GamePlan Consultants, which has worked with Crown and other large casinos.

“As non-Macau companies shy away from VIP activities in China, albeit perhaps temporarily, this should generally accrue to Macau's benefit,” Govertsen wrote.

To contact the reporter on this story: Daniela Wei in Hong Kong at jwei74@bloomberg.net. To contact the editors responsible for this story: K. Oanh Ha at oha3@bloomberg.net, Crayton Harrison, Lisa Wolfson