There’s a lesson here and it is this:
Don’t even think — no, don’t even play at the idea — that you can tell the Chinese government what to do, not even if you’re casino billionaire Steve Wynn.
You will get a smack down.
For Wynn, that smack down came in the form of the Macau government dragging his China CEO — and in fact all the CEOs in the casino industry — into an uncomfortable, discouraging private meeting on Sunday, according to Bloomberg.
We don’t know what was said, but can get the gist based on a release the government put out afterward.
The statement said that Macau has “no plan to make any changes” to its current policies on the industry, though it does regret certain opinions about its labour plans.
That was a direct shot at Wynn, though he’s not mentioned in the statement at all.
It also demands “clear understanding and full compliance” from all the businesses involved.
Wynn’s stock fell 7.3% on the news.
The Chinese government has been clamping down on casino industry activity for over a year, resulting in precipitous 30%-50% drops in gambling revenue month after month (on a year over year basis).
Last week, Wynn, the founder of Wynn Entertainment, attacked one specific way the government has squeezed the business after a dismal Q3 earnings announcement in which revenue coming from his Macau casino fell 37.9% from the same time last year.
On a conference call following the release an impassioned call for the Macau government to stop restricting the number of tables in new casino projects in Macau.
“In my 45 years of experience, I’ve never seen anything like this before,” he said.
Wynn is opening a new casino on the territory in 2016, so he’s been watching what happened to this year’s new casino projects (from peers Galaxy and Melco) with intense dismay.
“The notion that someone who has spent $US2.5 billion, and I’m talking about Melco now, doesn’t know how many tables they’re going to have … weeks before opening is preposterous.”
He railed against what that would do to employment, he called the government’s moves an “aberration,” and he blamed China’s crack down on gamblers for weakness in his Las Vegas business too.
“Any drop in our earnings in Las Vegas is a result of a drop in our Asian baccarat business,” Wynn said on the call. “If anything, the problems in China are causing us to refocus our energies in America.”
You don’t just get to say things like that about China if you’re trying to make money in China. But that’s always seemed fairly obvious.