Casino Giant Wynn Resorts Faces Stock Tumble

Although Wynn management may have felt discouraging gawkers and budget-conscious players was addition by subtraction, they may have found their elitism has cost them subtraction by subtraction.

Steve Wynn, casino and gambling magnate, explaining Tuesday the cause of Wynn Resorts' stock drop, referred to John Donne's famous quote, "No man is an island." Another Donne quote from the same work may also be on Wynn's mind regarding the market's closing bell: "Never send to know for whom the bell tolls; it tolls for thee." In response to declining revenue at the Wynn Las Vegas, trading in the company after New York markets closed led to a 4.2% drop in price per share, from $119.88 to $114.80.

While addressing the issues which caused the drop, Wynn (pictured) told investors and analysts on a conference call, "It would be unsophisticated to think Las Vegas is a magical island unto itself immune from the affects of the communities that serve it and its visitors. In general, we don't see a trend yet but we're not immune.'' 

Slot machine revenue at the Las Vegas casino was off by 5.6%; Wynn attributed the decline to a drop in walk-ins off the street, which he saw as due to the closings of the Stardust and New Frontier casinos, two of the closest properties to Wynn. 

However, he did not remark on possible effects resulting from Wynn Las Vegas' recent policy change regarding free drinks. This past fall Wynn became the first Strip casino to start charging for drinks to video poker players, a policy that was scheduled to expand to sportsbook and slot players. The point was to discourage the "coupon crowd" from flooding the ritzy, even snobby hotel. Perhaps that attitude toward a certain part of the clientele has paid off in ways but unforeseen and undesirable.

Certainly, Wynn is correct in indicating the overall economy has resulted in gamblers travelling less, and gambling smaller amounts. Still it would seem that, in troubled times most of all, any segment of the customer base would be considered valuable. Although Wynn management may have felt discouraging gawkers and budget-conscious players was addition by subtraction, they may have found their elitism has cost them subtraction by subtraction.

Wynn Resorts did receive positive news from Asia. Its Macau location continues to do booming business, as revenues there climbed 26% in the fourth quarter. The company also anticipates a major boost next year with the opening of Encore, a $2.2 billion hotel and casino located near the Wynn on the Las Vegas Strip.