MACAU (Reuters) - U.S. casino magnate Steve Wynn said on Tuesday that Wynn Macau Ltd’s latest casino resort in the former Portuguese enclave would cost $4 billion, as the company bets on continued growth in the world’s largest gambling destination.
In a media briefing at his Macau casino, the 70-year-old chairman and CEO of Wynn Resorts Ltd and Wynn Macau also expressed confidence that the property would provide a return on investment despite the current economic climate.
“Growth of the market has been so spectacular, the expansion so dramatic, it is unrealistic for it to continue at that rate,” Wynn said, though he added that the market did not need to keep increasing at such a pace for it to be a good place to do business.
Macau, located on the tip of China’s southern coast, has been a goldmine for casino operators, raking in more than five times the revenue that Vegas does as mainland visitors flock to the only Chinese city where they can casino-gamble legally.
But data showed last week that gambling revenue growth in Macau had slowed to 7.3 percent in May. That was its slowest expansion rate since July 2009 and a far cry from the 70-90 percent monthly growth rates seen in 2010, although total revenue was still the second highest for a single month.
Wynn shrugged off concerns of a slowdown in the VIP sector, which relies heavily on the availability of liquidity extended to wealthy gamblers.
“There has been an increase in capacity of VIP and I am not sure if the picture is clear of a marked slowdown. The market is still growing and I think it will continue to grow,” he said.
Macroeconomic risks in China, including easing economic growth, have sparked fears of a slowdown in the number of cash-rich Chinese travelling to gamble in Macau.
Wynn and rivals such as Sheldon Adelson’s Las Vegas Sands and MGM Resorts have been racing to expand in the crowded casino enclave despite economic uncertainty as there is only limited space remaining to build new projects.
The company has broken ground on its 51-acre (20-hectare) site located on a reclaimed stretch of land known as Cotai, putting it ahead of rivals including MGM and Macau kingpin Stanley Ho’s SJM Holdings, which are still awaiting government approval.
Wynn confirmed on Tuesday that financing for the resort, which will comprise 120,000 square feet of retail space, up to 10 restaurants, theatres, ballrooms and a nightclub, would come together in the next few weeks.
The new Macau monorail will stop at the lakeside front of the resort, which is slated to open in 2016, and the height of the building will be restricted to 120 meters (about 390 feet) due to its proximity to the airport.
On gaming, the property will have around 500 tables, Wynn said, stressing that the emphasis was on quality, not quantity.
Wynn’s Macau unit announced on May 2 that it had received formal approval from the government to begin construction on the new casino on the Cotai strip, a muddy plot of land only a few years ago, but it did not reveal the cost of the project at the time.
Macau officials are envisaging Cotai, also home to Melco Crown’s electric-blue casino towers, as a leisure and tourism hub that will ease Macau’s deep reliance on gambling. It is located 10 minutes from the main peninsula, where Wynn already operates a high-end casino.
Wynn also said the company’s board was not concerned about the outcome of a legal battle with former shareholder Kazuo Okada, a Japanese billionaire who helped bankroll Wynn’s casino developments starting in 2000 and is now building his own casino in the Philippines.
The case between the two businessmen, once best friends, is likely to drag on for a considerable time unless both parties settle, lawyers say.
Shares of Wynn Macau were up 2.8 percent in Hong Kong on Tuesday, outpacing a 1 percent gain in the benchmark index.
Reporting By Farah Master; Editing by Anne Marie Roantree and Chris Gallagher