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Wynn Impressed with Gaming Potential in Asia

18 Nov 2003

By Jeff Simpson

LAS VEGAS -- It's full steam ahead for Wynn Macau, Strip developer Steve Wynn said Monday.

Just back from a two-week trip to China, Hong Kong and Macau, Wynn and his company's board of directors witnessed firsthand the power of the Macau gambling market and the booming South China economy.

Wynn said the company remains committed to building in Macau, and he suggested the dynamic Chinese market will likely transform Wynn Resorts.

"I think the company will be more Chinese than American," he said. "This comes from a guy who's building a $2 billion hotel on the Strip."

The board's visits to Beijing, Hong Kong, Shanghai, South China and Macau, as well as meetings with Macau Chief Executive Edmund Ho and other top government officials, and current Macau casino operator Stanley Ho were eye-openers, Wynn said.

"The energy, the vitality, the explosive power of the (Chinese) marketplace has to be seen to be believed," Wynn said.

The dynamism of the South China market has yet to be fully appreciated by gaming investors, Deutsche Banc casino stock analyst Marc Falcone agreed.

"Based on my trip to Macau a couple of weeks ago, you can't overestimate the power of the South China economy," Falcone said, predicting that Macau gaming revenues would continue to grow.

Plans to build Wynn Macau, a megaresort slated to cost about $556 million, are on track, Wynn said. Improvements on Wynn Macau's $60 million, 14-acre site are set to begin in about five or six weeks, with groundbreaking for the hotel-casino to follow shortly thereafter.

The board's dinner with Edmund Ho affirmed Wynn's conviction that Macau government officials will follow through on commitments they've made to allow casinos to grant credit and to reduce taxable gaming revenues by the amount of uncollectible marker debt.

"We've got a deal over there, and it's cool," Wynn said. "The government is going to do all the things it takes to make the rules acceptable to Nevada (gaming regulators)."

Industry insiders suggest the Chinese gangs that control loan sharking and prostitution activities in and around Stanley Ho's properties can't be given the heave-ho until casinos can offer credit.

Stanley Ho and his top executives lunched with Wynn's board on the recent trip, and the current Macau operator reported dynamic business conditions that whetted the board's appetite to open Wynn Macau, he said.

Stanley Ho's bosses said recently relaxed rules allowing freer travel from China to Macau and Hong Kong fueled an increase in Macau gaming revenue from about $2 billion two years ago to an expected $3.8 billion this year.

"The new rules have caused a whole giant explosion in China and Hong Kong," Wynn said. "Ho and his executives reported a dramatic rise in upscale business from Shanghai."

He said he plans to open Wynn Macau all at once, probably early in 2006, about eight or nine months after the April 2005 opening tentatively scheduled for Wynn Las Vegas.

He had originally planned to open the Macau casino and a few restaurants as a first phase, with a hotel and additional restaurants to follow.

"We're going to open it all at once," Wynn said. "It'll be a true destination resort."

Wynn Resorts' Macau concession agreement requires the company to invest about $500 million by June 2009.

He believes that building a true Las Vegas-quality destination resort in Macau will send a message about the company's commitment to Macau and to China.

"We're building a destination resort; we're not building a gambling hall," Wynn said, taking a small swipe at Las Vegas Sands Chairman Sheldon Adelson's Macau plans.

Las Vegas Sands' partnership plans include building and opening a low-cost gambling hall to capture gambling revenue while its plans for a major megaresort Strip are developed.

Deutsche Banc's Falcone said both strategies should succeed.

"In the end it won't really matter if Sheldon opens in the second quarter of 2004 and Wynn opens early in 2006," he said. "The Macau market, and the South China market it taps into, should provide plenty of room for both companies to be successful."

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