Wynn Palace opened in August 2016.
Wynn Resorts founder and CEO Steve Wynn explained on Tuesday that new Wynn Palace casino lost more than $10 million to high rollers in April. The losses were through a junket operator which maintains a private high roller room in the Wynn Palace.
Steve Wynn, who has been in the Las Vegas casino business since 1967, described the losses as “the most unique statistical anomaly in my 50 years of doing this.”
Because of a single set of baccarat sessions by the Chinese high rollers, said the 75-year old Wynn, “one of our leading outlets lost money for the entire month”.
Suncity Group’s High-End Baccarat Room
The operator was Suncity Group, of the largest junket operators in Macau. Junket operators are third-party enterprises who recruit Chinese high stakes players to come to Macau casinos, arranging flights and accommodations. Most importantly, junket operators offer casino credit to the high rollers, because Cotai Strip casinos like Wynn Palace do not offer casino markers like Vegas Strip casinos do.
Baccarat High Rollers in Macau
Macau’s casino industry was built on baccarat. Baccarat has a house edge of about 1.2%, making it one of the best games in the casino for those who do not want to learn strategy. Because of the low house edge, Punto Banco baccarat is often played in the roped-off section of a Las Vegas casino — reserved for the high rollers.
In Macau, baccarat is ascendant. Chinese players might not have to learn strategies, but they do study the flow of the game. In China (and other Asian cultures), the concept of flow (“chi”) is important, so baccarat players often study the various tables, trying to determine which ones will bring them good fortune in the near future. It might sound superstitious, but the passion for baccarat caused Macau to be the world’s largest gaming destination — and has a better house edge than the staple of American casino gambling: slot machines.
Wynn: “The Bottom Fell Out”
The high rollers who took Steve Wynn’s new casino for $10 million certainly predicted the flow of game. As Steve Wynn noted, in the extraordinary April baccarat sessions at Wynn Palace, “The bottom fell out and all of the players won millions of dollars.”
Readers might assume Steve Wynn is making excuses to his shareholders. Perhaps that’s part of the story, but the founder of Wynn Resorts realizes that stories of big losses for the house generates free publicity, or almost-free publicity. That’s why brick-and-mortar and online casinos always release news stories about big jackpot wins on progressive slots, or lotteries around the world show people holding oversized checks with lotto prize winnings on them.
Robert Hannum on Baccarat Volatility
The story is newsworthy in this case, according to the experts. Robert Hannum, a professor of Risk and Gaming at the University of Denver, said of the Wynn Palace losses, “The odds are astronomically high. Of course, black swans do occur and some might say that anything can happen in the casino business.”
In baccarat, a 1.2% house edge for a bettor who gambles $10 million creates an expectation of a $120,000 loss for the gambler. That expectation involved probability, though. The casino can lose anytime it wagers, just like the gambler. Over time, the casino expects to win $120,000 on each $10 million wagered. That is why the casino wants to keep the game going as long as possible, because the longer the game, the more likely results will look like expectations.
Wynn Palace’s 2nd Quarter Revenues
Wynn Palace’s opening months have had other disappointments. The multi-billion dollar casino opened on the Cotai Strip in August 2016. Since then, construction on all sides of the new property has hampered access to the resort, and thus hampered revenues.
The casino’s second quarter earnings missed expectation. As a result, Wynn Resorts shares lost 8% over a two-day period last week. Hyping the losses at the baccarat table explains some of the troubles, though volatility at the high roller baccarat tables can be a problem in the short term at times.
Las Vegas Sands Baccarat Ups-and-Downs
Las Vegas Sands Corporation reported a $15 million to $20 million loss in January 2017, due to one single gambler at the Parisian Macau resort on the Cotai Peninsula. Those are the breaks, though LVS noted that it had an amazing windfall in the Marina Bay Sands in Singapore, as a high-stakes baccarat contributed to a $100 million jump in revenues.
LVS President and Chief Operating Officer Rob Goldstein said of the big boost from Marina Bay Sands, “Let’s be clear, we had a lot of luck this quarter. I think it bears repeating that this is a highly concentrated segment that a couple of dozen players can make a difference in a quarter.”
