Steve Wynn is still getting spanked

Wynn Resorts was crushed in after hours trading on Tuesday and the carnage is continuing into the trading day on Wednesday.

The stock opened down 15%.

“WYNN Macau EBITDA was down 45% year over year vs Street expectations of a 35% decline. We note the tone of the call was extremely bearish, as WYNN’s CEO pointed to continued weakness in Macau and policy uncertainty,” wrote Wells Fargo analyst Cameron McKnight in a note following the call. “

He continued: “Against this backdrop, WYNN noted that it is cutting its quarterly dividend. We are reducing our 2015/16 Macau EBITDA estimates from $US1,046MM/$US1,380MM to $US853MM/$US1,077MM.”

The reason for Wynn’s woes is singular. Macau, once the world’s gambling Mecca, has ground to a halt due to Chinese President Xi Jinping’s anti-corruption drive. Wynn Macau’s revenue fell 38% from this time last year, and Wynn Resorts is hurting even more than its peers in the space.

The high roller market is all but dead. Xi and Macau officials installed cameras in VIP rooms, and the junket businesses that catered to super rich gamblers have shuttered at a stunning rate. At the end of 2014 16% of those businesses at the island were gone.

Retail gamblers have been scared away as well. Xi has placed restrictions on travel on the island, capped the numbers of visitors — making it impossible for casinos to grow retail gambling revenue to make up for lost high roller revenue — and made it clear that the government will be monitoring UnionPay, China’s debit card.

Wynn CEO Steve Wynn is known for his temper, but when it comes to the Chinese government, he’s shown restraint.

“…you have to have a sense of humour about this stuff,” he said on the call following his earnings announcement. “I imagine Sheldon’s [Adelson, CEO of Las Vegas Sands] listening and he’s chuckling at this moment.”

And sometimes Wynn’s shown confusion.

“Our hopes for improvement in the Chinese New Year turned out be incorrect,” he said. Adding that the future of Macau seems “cloudy.”

That may be a bit unfair. Xi’s government has actually been totally clear. China wants to clean up Macau and make it more like Las Vegas — a more family oriented, retail gambling based place where Celine Dione can perform and big companies can host conferences.

That’s what the world needs, right?

Check out Wynn’s numbers below:

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