永利渡假村 (WYNN) 2011 Q2 法說會逐字稿

Good afternoon and welcome to the Wynn Resorts second-quarter 2011 earnings call.

Joining the call on behalf of the Company today are Steve Wynn, Marc Schorr, Matt Maddox, Marilyn Spiegel, Scott Peterson and, on the phone, Ian Coughlan, President of Wynn Macau and Robert Gansmo, CFO of Wynn Macau.

After the speakers' remarks, there will be a question-and-answer session.

(Operator Instructions).

Now I would like to turn the call over to Mister Maddox.

Please go ahead, Sir.

Hi.

Thank you and good afternoon, everyone.

Before we get started, I just need to remind everybody we will be making forward-looking statements under the Safe Harbor of federal securities laws and those statements may or may not come true.

With that I'm going to go ahead and turn it over to Steve Wynn for the opening comments.

Well, usually, we always say the same thing.

The numbers speak for themselves.

We had a great first quarter, the best in our history.

And we went through it -- we were just around $400 million the first quarter.

We are $447 million this time and that quarter was about 59% better than a year ago and, in fact, for the six months we are 62% better than a year ago.

We are all in this organization heartened by the results and on January 3 -- excuse me, on July 3, I got a phone call.

I was in a different city from my colleague, Marc Schorr, and he told me that on the 3rd day of July, we equaled in Las Vegas our cash flow, our profits of the entire year of 2010.

That was a very supercharged thing to hear, but we did $271 million last year and we hit $271 million on the 3rd of July.

So for the balance of the year, everything from here on in in Las Vegas is improvement.

And we benefited from very favorable whole percentage, but Marilyn is on the call and Marilyn, I think, can give a little bit more color to the Las Vegas results other than the whole percentage.

Do you want to do that, Marilyn?

Sure, Steve.

Thank you.

It was an amazing second quarter and we had our gaming revenues increase 35%.

We have seen volume increases in baccarat, in other table games and in slots very slightly, but we had amazing hold in our baccarat business.

And so our international marketing partners continue to send us great customers and we see a lot of improvement in that business.

We are up over 75% on international customers.

Marilyn?

Marilyn, I want you to focus on non-casino.

Oh, in non-casino we also have a 15.7% increase and that was helped by our hotel revenue.

We had $91 million in hotel revenue, which is the highest cash revenue we have ever had at Wynn Las Vegas and Encore Las Vegas, and every one of the revenue areas showed increases even higher than the first quarter.

And so, we saw our food and beverage revenue increase 13%.

About two thirds of that was based upon Encore Beach Club and Surrender.

We also had improvements in our catering business and both our fine dining and our casual dining restaurants improved.

We had improvement in retail.

Our lease stores were up 20%.

Our entertainment also improved where we had a 22% increase, mostly due to additional shows with Garth Brooks.

So it was the sustainable portion of the non-gaming revenues were there for us at a 15.7% improvement.

Thank you, Marilyn.

The reason that I asked Marilyn to highlight and get that specific -- which ordinarily we don't do, you can read those things, but I want to point out that in the business that we are in, you don't really sustain growth unless the non-casino part of the hotel reflects the improvement.

The vitality in our business comes from the non-casino portions.

After all, slot machines and roulette tables and the baccarat and blackjack tables, they are the same everywhere.

They are a commodity.

They have no in -- they have no inert power in them.

It's where they are and who are the people that are staying in the hotel and why they are staying in a hotel that make the difference competitively and create the franchise in our business.

So we, as you know, spend a great deal of money building buildings that are fanciful and emotionally satisfying for our guests.

We design to emotion as opposed to designing to a material.

If marble and onyx help us get the emotion we are after, then we use marble and onyx and if it is not marble and onyx, then we don't care about marble and onyx or hand-woven fabrics and crystal chandeliers and such.

Color, lighting, and emotion, the emotion of our hotels is the key to, I believe, their longevity and the franchise that they have.

We really don't have much else to say except that it is nice to have good business in a period in America that's in the world that is so troubled and unpredictable.

But, good news is good news and if we are running against the grain, I think probably our colleagues in Las Vegas and I know our colleagues in China are enjoying improvement.

I read some of the analysts' anticipatory publications about where they thought we would come out on this quarter and they happily, for us, underestimated it.

So that is the story.

We'll take questions.

(Operator Instructions).

Joe Greff with JPMorgan.

Hello, everyone.

Marilyn, I was hoping -- or Matt, I was hoping that you can sort of help us understand where 2Q Las Vegas EBITDA would be with normalized hold or give us some sort of sense of that?

And then, Matt, I notice your provision for doubtful accounts went down year over year.

Can you help us understand that and whether that was driven more out of Las Vegas or Macau?

Then, I have a quick follow-up.

Well, I will answer that part, Joe.

We collected the money and our auditors don't let us hold the reserve when we collect money.

That's right.

And we are actually still 50% reserved on our receivables bucket in the second quarter which is more then we were in the first quarter.

And on a six-months basis, you'll still see they are about the same at $13 million year over year.

But that is the bad debt piece.

We have been doing this for 40 odd years and not once, in any of our hotels, starting at the Golden Nugget to Atlantic City, to anywhere, have we ever had to take a special charge for bad debt beyond our normal reserve.

We are very conservative giving money away for people to gamble with.

We only -- we don't encourage, we don't use credit as a marketing tool.

We only give credit to people who, as a convenience to people who are well-entitled to it.

And for a normalized EBITDA, it is in the neighborhood of $115 million.

You can do the math.

All the numbers are there but that is about where we would put it.

Okay.

Great.

Obviously the results in Macau speak for themselves.

Maybe Matt, or Ian, whoever wants to answer this, it would be helpful to all of us as we are kind of learning about the increase in profitability of Macau's, where do you think segment margins have gone en masse in VIP?

Where are they now?

Where were they a year ago as you get the volume?

You are obviously generating great operating leverage there, but if you could help us understand that or shed some light on that, that would be helpful.

Matt will answer that question.

Sure.

So what I would say, Joe, is we don't get into providing segment margins, but what you find is with increasing volumes the margins are definitely going up.

And on the VIP side with our increasing individual program win, we are seeing higher margins in VIP.

We are also seeing higher margins in the mass casino as we are winning more in the mass casino.

And it's really across the board.

So the 30% to 32% mark in the EBITDA margin for Wynn Macau feels very comfortable for us.

We have been there for about three quarters in a row now and that is about what I would expect.

Great.

Thanks, guys.

Competition.

Competition hasn't dented us, at least not yet.

Great.

Thank you.

Shaun Kelley with Bank of America.

Good afternoon, everyone.

Just wanted to start maybe by talking a little bit more about Las Vegas.

Steve, we continue to hear back from folks asking about -- that were expecting kind of a slowdown in the second quarter and then you guys posted numbers that were, I think even adjusting for hold, probably better than they were in the first quarter despite the convention business.

So could you give us your thoughts just about the trajectory of the improvement in Las Vegas overall?

Obviously, you set the high-end and your thoughts a little bit about maybe July and August, what you are seeing, looking out a little bit further?

Well, the improvements have a lot to do with good management at the property level under Marilyn and Maurice and Scott and everybody else in the clan.

They have been doing a really good job.

July, by our predictions, based upon what -- our expectations, rather, was going to be the worst month of the year.

And we were going to experience soft midweek occupancy and the weekends were going to be better, but July was the black hole.

August, as conventions pick up with Magic Show and the others around the end of the second week or the second week of the month, then we build momentum and we head into October where we are sold out and at much higher room rates as you noticed this year.

And so, we have been surprised in July by a better occupancy than we had thought.

But what was surprising about it was that it showed up, in the last two or three days, really late bookings this year in July.

We have been picking up an extra 5 or 6 points of occupancy and in some cases, right, Marilyn, almost we went to full occupancies.

Surprised us.

That's correct.

It's over (multiple speakers).

All within 72 -- or 48 or 72 hours of the days.

So July has been a surprise in that regard.

At a much higher rate.

At a much higher rate.

We did not lower our rates like some of our competitors did.

We have come to the conclusion here -- incidentally, I would like to add this parenthetically -- having tried this before and failed, we don't want to make the mistake again.

This place is not set for price-cutting.

We lower the price, we can fill the rooms in an instance because they are such fancy rains, but we get people that carry their beer in from 7-Eleven, move their own bags, and don't eat in our fine dining.

We can't use them.

This is not a place for folks that have that kind of economy mentality.

This is a place for people who expect superior service, higher quality food, beverage, and everything else.

And so we price our property accordingly and we stay there.

And if we lose some occupancy, well, we will adjust our expenses accordingly.

But we don't lower the price.

It doesn't work for us.

We tried it and it is a fail strategy, not only for us, I think for everybody.

That's the overview I can give you on that.

The fourth quarter looks great and now that we are getting through July, it gets better again.

But we're not doing bad.

I mean, in July -- I took a look, we are making $1 million a day.

I think that's great.

Maybe -- you know, anything over $20 million makes me real happy in July.

Marilyn, how do you feel about it?

We are tracking well in July.

In August we are going to have some conventions business that wasn't here last year and as you say October is going to be a dynamite month.

We don't have a inch of convention space that we can still sell.

So there you are.

Does that help you with your question?

That's really helpful.

And then maybe one if I could just on Macau real quickly.

One consistent concern that I get back from a lot of folks is just on the productivity that you guys are doing and this kind of sparks the last question on as it relates to the margins that you guys are able to put up with.

What are you doing now as you've raised I think some of the pricing there that's theoretical averages that you guys are doing on the mass-market side, but what else, what next are you able to do to continue to yield that property since you already are putting up somewhere between two and three times the kind of win per tables than any other property in the market is doing and probably any other property in the world is doing?

Just some -- just if you can give distributed thoughts on that would be really helpful.

I think I'll let Matt Maddox handle that remark.

I hate to give you the simple answer, but it's true.

It is about the people at the table.

And we keep attracting the top end of the market, whether it is in slots, mass-market, or VIP.

And our tables win 50% more than the market and our slots win three times more than the market.

And that is really it.

It is the people sitting at the tables.

And as long as we are the top property in Macau, that's -- you'll see us continue to outpace the market.

So you (technical difficulty) environment?

Actually we've been outpacing the market for 40 years.

We had the highest win per foot in spite of being the smallest casino in Atlantic City, we made more money than everybody else.

We were 168% of the average yield per foot.

We were the number one place in downtown Las Vegas.

And as near as I can recall, ever since we opened Mirage in 1989, one of our properties has been the top spot -- the top one in Nevada.

And then we took our act to Macau.

So we have only been there.

So we are consistent.

We deal to a certain market segment.

We are comfortable with that market segment.

We think we know those people, our guests.

We know what they expect and we've managed to make promises that we can keep.

There's always a temptation to make big promises or to talk about big promises, and then when you don't deliver, it is painful.

We're going to be five years in September.

Five years.

What?

In Macau.

Yes.

September will be our fifth anniversary in People's Republic of China and Macau.

And we love it there.

We are so grateful to be part of that market and to be allowed to participate in that community.

We find the political environment, the regulatory environment, the human resource environment that we are in to be absolutely delicious.

Life is quite straightforward in China.

The government is predictable.

Our employees are imminently trainable.

They are anxious to please, they have a fabulous attitude.

Whether they are local Macau people, mainland Chinese people, folks from the Philippines, they are just wonderful.

And all of that has come together in to help us deliver the kind of product that we have always been delivering.

We have great relationships with our junket markets.

We've got -- yes that's right.

Marc, I don't know if you can hear Marc.

Marc pays special attention with Linda Chen to our relationships with our junket partners and they are doing a fabulous job.

And as you know, most of those junket operators are everywhere.

They are not just with us.

So what you learn from that is that junket operators need to be everywhere because they service people that move around.

But we do better because, at the end of the day, it is the establishment that brings the people.

It is the staff and the employees that keep those customers wanting to come back.

And then the junket operator can service their -- service them, of course, but it is the employees.

It is the people that -- it's only people that make people happy.

Not the stuff.

It's the people.

And our specialty has been our human resource [stuff].

That's great.

Thank you very much.

Mark Strawn with Morgan Stanley.

Any updates to your Cotai project timeline or the land granting process there?

The land granting process is continuing.

We are co-operating with the government and moving along very nicely and we are conducting our soil research in preparation to -- the foundation beginning when the final granting takes place and we're moving right along nicely and on schedule.

Thank you.

With a property that -- you know it is hard to take seriously what any hotel developer says about their own stuff.

But I'm going to -- I am going to say this about the Macau project, which we are going to show everybody.

We've -- it's finished.

We have it drawn, we have it rendered, and all of that stuff.

We are finishing the modeling of the scale model.

But the hotel is another generation of an integrated resort.

It is a category breaker.

And since we have had -- I've been doing this for 40 odd years.

And with DeRuyter Butler, my design partner, and Roger Thomas, the three of us are the ones that do this.

And we just finished a session about 15 minutes ago and this is going away, another dimension of work that we've done the last two years.

This project is going to justify the time it took to create it.

It is a humdinger.

We will definitely help Cotai keep the promise and Macau keep the promise that the government has set.

And that is to broaden the appeal of Macau, to make it the destination resort in terms of entertainment, shopping, food and beverage, and conventions in all of Asia.

And I promise, I promise you that when it comes to those elements of entertainment, conventions, food and beverage, service and hospitality, and iconic architecture and design, that the Cotai project is by an enormous amount the best work we have ever done.

Thank you.

1,500 rooms.

Virtually all suites.

500 table games, big theater, public entertainment in virtually every part of the building.

Full range of restaurants and stores.

Lot of exterior and interior public entertainment, as well as performing arts in the big theater.

Access and the movement of people we have learned new things.

And you know, again, we are benefiting tremendously from the fact that we have been in China nearly 10 years.

And we know these customers now.

We are dealing from our own deck, from our own experience as opposed to learning from Lisboa or learning from Peninsula as we have been doing up till now.

And that is a big thing for us.

To be able to draw upon our own deeper experience, to create and respond in ways that will be very resonant with our customer base.

End of answer.

John Oh with CLSA.

Just a quick question on the competitive landscape, especially in your VIP segment.

How do you see that shaping up at least in the last two months since Galaxy Macau's recent opening?

We don't pay much attention to that actually.

Because we can only make money in our own building.

And that is where we think the struggle has to be met and won.

So if you look at the numbers, as we do, you'll see that the competitive landscape for us is delightful.

The other places I think are doing very well, in addition.

And that's very good news.

You want to be doing well in an environment where other people are doing well and doing clever things.

I was impressed with Galaxy when it opened.

I went to visit it with my colleagues and I congratulated my friends in that organization and I have many of them from the ownership to the management level.

And I think they did a great job.

I think Galaxy, for example, represents or it shows you what happens when organizations mature.

Galaxy was built by the Loy family and that organization includes my friend Mike Mecca.

Galaxy was built after everybody had learned a lot about the people and what the people want.

Galaxy is responding to that.

Naturally in a big brand-new property like that, they learn and after we opened these kinds of places we adjust and amend them.

Because no matter how long you work on the plans, when they open, they take on a life of their own.

And sometimes some of the -- part of that life is that you get surprises, good and bad.

Venetian is doing great as far as we can see.

City of Dreams has kept its promise, I think.

I talked to Lawrence and Jamie Packer all the time.

I think everybody is pretty happy.

And not to say that we are not dealing with some of the infrastructure issues that occur, but the Venetian group have their ferries running and really clicking away, bringing people to the Cotai side and those boats were well needed.

So there was something where the Venetian invested a lot of money in order to have capacity that basically was built for the future.

And that future is coming true very rapidly and it is a good thing we've got those ferries and I think the final work on all the ferry terminal construction on Cotai is soon to be completed.

At the beginning of 2012.

At the beginning of 2012.

But in the meantime, it is working.

Thousands and thousands of people are coming every day on those boats as they do on Shun Tak's boats over on the peninsula.

So the town is keeping up with itself at an amazing growth rate.

I think that Macau in the end is going to end up being exactly what the government wanted it to be.

The great destination, convention, hospitality center of Asia.

Next question.

Harry Curtis with Nomura Securities.

Hello, Steve.

You have inspired me to take the wheels off of my luggage next time I check into Wynn Las Vegas.

(laughter).

Sorry, Harry.

I know what a thin budget all you sell side analysts are on.

So I should be more considerate, I guess.

Yes, we are pikers.

Two quick questions.

First of all, in Vegas, I am interested in over the last six to 12 months how your mix has changed.

If you could make some comments about the quality of your customer base today versus 2006 and 2007.

And then turning to Macau, you know, you build buildings where you generate excess demand.

So why not bigger than 1,500 rooms and/or will you at least be able to have a pad so that you can expand, or a podium, to expand that beyond 1.500 rooms?

We do have room to expand.

I'll answer the last part of the question because I'm on it at the moment.

We do have room to add more.

We were thinking also of doing something that is a little off the track, but we -- it has been suggested to us in the past that it would be wonderful to have a reasonably sized hotel, a few hundred rooms, that does not have gaming.

That is conveniently located.

So the government officials and others can come to Macau, enjoy all of the non-casino attractions without staying in a gambling hall.

As you know, politically, that is a sensitive issue.

Politicians don't go in casinos in China after they are opened.

And so, I am thinking that I would like to maybe help meet that demand and of course, rooms of that sort also are integrated and would be integrated with our convention facilities.

So, as far as why we didn't build more than 1,500 rooms, you know, we have height restrictions because of the nature of the location of Cotai and then we have restrictions that are imposed upon common sense dynamics of design.

How long are the hallways?

How far do people have to walk?

We've got population getting older, room service, baggage, housekeeping, that has to service these rooms and we have rules about we don't want hallways that go on forever.

So when you balance size -- and then we make bigger rooms.

You know in Cotai, I will tell you, you know (technical difficulties) ever been in, if it is a modern hotel has a six-foot wide hallway going to the rooms.

When you go to eight, that is like the villas at Wynn in Las Vegas.

Our regular rooms in Cotai have eight-foot corridors, which are very palatial.

They have 11-foot ceilings in regular rooms.

I mean, we decided that it was quality, not quantity.

There are an awful lot of active buildings under construction now in Macau being offered by our competitors that are undoubtedly [good] jobs.

We remember who we are.

So we are going to [continue to cater] to the 1,500 (technical difficulty) a day and 1,000 -- you know, 2,500 rooms between two places.

And as we grow and the market allows, we are having much more convention space than we've ever had before, but we have room to expand our convention space and our rooms for the conventioneers as we go along.

But I keep an eye on the Venetian, for example, which has two hotels under construction that are more reasonably priced than a Four Seasons or a Wynn.

And so, we size the place for quality.

You know, bigger is not necessarily better.

Better is better.

That's the answer to that.

And in Las Vegas I will let Marilyn answer.

Maybe I should answer it (multiple speakers) .

Well, (multiple speakers) hear before.

Marc should answer.

Domestically we are staying the same customers in 2011 as we did in 2006 and 2007.

The increase in 2011 has been our international business.

Because our brand is growing so in China, people are recognizing Wynn.

So when they travel to America, the place they go to is Wynn.

So we are seeing a much broader market internationally over 11 2011 versus 2006 and 2007.

And China represents over 75% of the international exchange, do you think?

Yes.

Right.

Great.

Very good.

Thank you.

Robin Farley with UBS.

Thanks.

I had a question on -- you have made some public comments about interest in Singapore.

And I wonder if you could talk a little bit about whether you have had initial discussions and given that because you are there till 2017, whether it is too early to have discussions and just kind of what your view is on that?

I -- naturally anybody would be interested in Singapore, it is such a great place to be in business.

But I really, Robin, I don't really have anything constructive to add.

As you point out, that market is dedicated to an exclusive arrangement for the next 5 1/2 years and so, you know, I think that it's easy to say that Singapore is exciting.

And it is.

If we were ever given the chance to be in business in Singapore, we would be thrilled and delighted to bring our best work there.

But that is not a decision for us to make.

That is something that will take its course in the future.

Okay, great.

Thanks.

David Katz with Jefferies.

Good afternoon.

I wanted to ask about Las Vegas, if I may, and just looking at how strong the performance has been, what is your perception about how the rest of the Strip is competing?

I guess I am wondering, the properties are what they are, and perhaps other competitors on the Strip may not have had the same capital resources available to them and whether or not you might be perceived to be taking some share from --?

(multiple speakers).

I don't know.

You know we finished the last of our -- I think we have a few more rooms, I think we have 11 or 12 villas that are being finished next month in the month of August.

But we just finished $100 million worth of remodeling and another $100 million of additions and improvements.

We invested in this Company in the last 24 months, $200 million.

Thanks to our investments in China, we were able to benefit America.

Not exactly what you hear if you watch a White House press conference, but China has made it possible for us to strengthen and protect our employees and strengthen our business in Las Vegas.

I had the pleasure of having dinner Thursday night, I think was Wednesday or Thursday, it was Thursday night with Marilyn Spiegel and her husband Tom, and Miriam and Sheldon Adelson, and we had a great time.

But we -- Sheldon and I didn't get into discussion of the last quarter.

So now that I think about it, I wish that I had asked him.

But I think they will be giving their earnings and you'll be hearing from MGM and Harrah's pretty soon.

I honestly don't know.

But my guess would be that everybody is doing better this year than they did last year.

Marc, you talk to those guys.

From what -- everything has been stronger this quarter over last quarter, especially -- .

So the second quarter is better than the first?

No, the second quarter is better than the second quarter last year.

Last year?

Yes.

I see.

Did you hear that, David?

I did and I guess, I wish you had asked also -- and if I can just follow it up with one more -- recognizing that groups in conventions and so forth are not your -- not as important for you as they may be for some others, what is (multiple speakers) --?

Getting more important all the time.

It is getting more important all the time.

Okay.

How is -- how you say your sort of next year is setting up from a bookings perspective?

Las Vegas, David?

Yes, please.

Marilyn?

So, for 2012, we are tracking on pace with where we were in 2011 for room nights.

We are obviously pushing a little rate, but we think it will be a good convention year in 2012, also.

We have grown conventions this year, of course, over 2010.

But it sounds like the upside would be from price.

Correct.

And you also have to remember we have a few things, you had some big citywides that aren't going to be back in Las Vegas in the first quarter, like [Conag Con] Expo.

You have got a difference with Chinese New Year and Super Bowl.

Last year they converged on a singular weekend and this year they will be at different times so they will take two weeks of convention space out of the component.

And incidentally, that is a great thing when Super Bowl and Chinese New Years are on separate weekends.

We hate it when they are on the same weekend.

Another thing, Marilyn, we will also have more rooms available because we were doing a remodel in most of 2010.

That's right.

Yes.

We had 8% or 10% of the rim nights out every, what's in it, Marilyn, about 8% or 10% as we rotated through the building?

Consistently, yes.

So you -- that's 400 or 500 rooms here.

Very helpful.

Appreciate it.

Bill Lerner with Union Gaming.

Hi there.

Just two development questions for you.

One in Macau, one in Vegas.

Does it -- maybe you're already contemplating this formally, but doesn't it make sense to build residential or villas in Macau, number one?

And then number two, in Vegas, especially as I hear Marilyn talk about a month like October, for example, that there's not an inch of meeting square footage left in Las Vegas.

And as we think about limited or no supply over the next several years being added back to Las Vegas, does it not make sense to expand your meeting square footage?

I know you can do it east of Country Club or in that area?

Well, here's our problem.

There are a host of opportunities for expansion in Las Vegas, a host of opportunities to create tens of thousands of jobs in Las Vegas.

I know that I can do 10,000 more myself, and according to the Chamber of Commerce and the Visitors Convention Bureau, if we hired 10,000 employees, it would create another 20,000 additional jobs for a grand total of 30,000.

I believe in Las Vegas.

I think its best days are ahead of it, but I'm afraid to do anything in the current political environment in the United States.

You watch television and see what is going on on this debt ceiling issue and what I consider to be a total lack of leadership from the President, and nothing is going to get fixed until the President himself steps up and wrangles both parties in Congress.

But everybody is so political, so focused on holding their job for the next year, that the discussion in Washington is nauseating.

And I'm saying it bluntly, that this administration is the greatest wet blanket to business and progress and job creation in my lifetime.

And I could prove it and I could spend the next three hours giving you examples of all of us in this marketplace that are frightened to death about all the new regulations, our healthcare costs escalate, regulations coming from left and right, a President that seems -- that keeps using that word redistribution.

Well, my customers, and the companies that provide the vitality for the hospitality and restaurant industries in the United States of America, they are frightened of this administration.

And it makes you slow down and not invest your money.

Everybody complains about how much money is on the side in America.

You bet.

And until we change the tempo and the conversation from Washington, it is not going to change.

And those of us who have business opportunities and the capital to do it are going to sit in fear of the President.

And a lot of people don't want to say that.

They say, oh God, don't be attacking Obama.

Well, this is Obama's deal.

And it is Obama that is responsible for this fear in America.

The guy keeps making speeches about redistribution and maybe we ought to do something to businesses that don't invest, they are holding too much money.

You know, we haven't heard that kind of talk except from pure socialists.

Everybody is afraid of the government and there is no need soft-pedaling it.

It is the truth.

It is the truth.

And that is true of Democratic businessmen, and Republican businessmen, and I am a Democratic businessman, and a repu -- I support Harry Reid, I support Democrats and Republicans, and I am telling you that the business community in this country is frightened to death of the weird political philosophy of the President of the United States.

And until he is gone, everybody is going to be sitting on their thumbs.

Thanks for that.

How about on the Macau residential side?

I don't know if you can -- I suspect you would want to and it would make sense to, but can you build residential as part of your project?

I guess you can.

We could.

But the government told us they didn't want residential apartments on Cotai.

They made a very specific mandate about that.

Cotai was supposed to be for the hospitality industry, not for residential.

I think that the Venetian has been able to, if I understand correctly with the service apartments that maybe they are causing us to have a change, but (multiple speakers).

In the early stages of Cotai, we were instructed in a contrary way by the government of Macau.

And incidentally, I am going to stay on this point for another minute.

If the government, if the administration in Washington is a frightening the dickens out of those of us who create jobs, and build buildings, and make allies for their employees, they are attacking China where, in the case of my Company, the vitality of capital to improve Las Vegas has come from.

You know, it is the double whammy.

American companies that have ventured abroad to broaden their markets are bringing money -- have reinvested much of that in America.

And so the rhetoric about offshore capital, there would be a lot more of it brought back here if the government did intelligent and encouraging things to bring capital back.

But this is a very business, job-creating, unfriendly administration and that is the plain truth of it.

And so you know, well, you want to build condominiums, why?

You want to protect yourself in this environment.

Everybody is in a defensive crouch, except for Jim Immelt, who is sort of a Judas goat.

Thanks, Steve.

Tom Marsico with Marsico Capital Management.

Hello, Steve.

I just wanted to say great quarter on behalf of everyone here at Marsico Capital.

I was impressed with your results in Las Vegas, given the consumer confidence numbers that have been coming out over the last few months.

And I know that you speak to a lot of different business leaders.

And is there a difference among your customers that you are seeing this level of business given that terrible consumer confidence that we are seeing across the country?

We are getting a lot of our benefit in retail, food and beverage, hotel, and gaming, because of the international business that is coming here.

These gaming companies certainly ours, are big exporting enterprises.

We are offsetting a lot of those imports that people talk about.

Foreigners, people with non-American passports, mainly Asians, mainly Chinese people come to the United States if they can get through Homeland Security without too much misery.

If they can get a visa, they come to the United States and they leave their money here.

They are generous, and tasteful.

They shop for fine products.

They eat good food.

They tip well.

They create that job opportunities here.

And -- .

It has been my understanding that the visa process for the Chinese to come to the United States is more difficult than it is to go to other countries such as France where they have seen a tremendous impact of the Chinese going to Europe.

Do you see any changes?

Or have you been in discussion at all with the Commerce Department as far as trying to ease those restrictions?

Yes.

As a matter of fact, you are quite correct.

Coming to the United States is tougher than going almost anywhere else in the world.

Homeland Security has -- we seem to have been safe more or less, but so much of it is excessive and irrational.

You know like patting down babies and old ladies and stuff like that, but it is very difficult, it is more difficult today to get to the United States for people who have been coming here for years, for decades.

Our customers that are big businessmen that have been coming to America for 10, 15, 20 years, are asking us for help to relieve the bureaucratic congestion of government overregulation in this area.

We have talked to Homeland Security.

They are aware of the problem.

So is Customs and Immigration and the State Department.

And you know when we talk to any given individual in those organizations and those bureaucracies, seats, they are very sympathetic and they know the truth of the complaint.

And they know that the truth of the fact that these things are very often excessive and unnecessary.

But yet there seems to be a tremendous amount of inertia to move government in America, whether it is the deficit management and coming to some kind of logical conclusion before August 2 or whatever it is, or whether it is getting visas.

Everybody has a clear understanding of the problem, but when it comes to our government, it seems to be getting more and more sclerotic, more and more inflexible.

By its own device, it keeps growing and growing and getting more and more onerous, more and more sluggish in its responses to real problems and sluggish in its ability to take advantage of a real opportunity.

And it is frustrating for me.

Because I got a front row seat.

Well, one of the things that I've noticed is that the governors of the states seem to be taking more interest in trying to get their states moving forward and changing business practices.

And I was listening to the governor from Massachusetts, the Democratic governor saying that they just moved to number 6 on the CNBC easiest place to do business, whatever that's worth.

But I know that there have been some interest discussed by street analysts of -- potential of gaming in Massachusetts other than Native American gaming.

Can you update us on that, if there's anything there?

Well, it's interesting that Massachusetts is really seriously considering legalization of some form of general casino gambling and naturally like we watch Texas and Miami and Florida, rather.

We watch Massachusetts and we are keeping a close eye on that.

When and if the government moves, as they have suggested they are going to do in September, we will be anxious to see the form and the business opportunity that is inherent in that legislation.

And if it represents business opportunity, then we would try and explore options in that marketplace.

I was surprised, Tom, incidentally, when you mention governors.

I was amazed and delighted and I'm very respectful of the work that Governor Cuomo has done in New York.

He's a Democratic governor that is showing the kind of leadership that I wish we had in Washington.

Just one other question.

The balance sheet is amazingly strong.

Your thoughts on dividends near at the end of the year, on special.

I saw you took off the regular dividend, which we appreciate.

Well, we always look for opportunities to distribute money to our shareholders and I know that -- because I am familiar with the investor bases that covers 70% or 80% of the ownership of this Company and I know that everybody agrees with you.

So, what Matt does, at the end of the year he takes a look at the landscape.

We go through the vigorous process of -- our Board does, our Board of Directors is very fastidious about this in making sure that we've crossed all the T's, dotted all the I's, anticipated our financial responsibilities, and then we come up with a number that we think is available for a dividend or even a special dividend.

In the last few years, as you know, Tom, it has amounted to about $26 a share, which is twice what we went public for.

Yes.

It did terrific.

And I'm hoping that that will continue.

Again, you are a keen observer of what is going on.

You tell me what to expect in Washington in the next 30 days and you get paid -- you get the blue ribbon.

I think people are getting pretty tired of both parties acting the way that they have and I would agree with you the lack of leadership from the President.

I like to see him more involved.

Thanks very much for all the hard work and great results.

We really appreciate it.

Nice talking to you, Tom.

You too.

Steve Kent with Goldman Sachs.

Good afternoon.

Just on some of the details from the quarter.

It looked like the slot win per unit per day was much higher in Macau than last year.

And maybe if you could just talk about the change in the customer care or marketing or product?

And then --.

Mister Schorr is here and these are things that are near and dear to his heart.

Basically it is the same customer.

We have less equipment on the floor.

So that is what is going to drive up the win per unit, it is as simple as that.

And the market obviously grew a lot and you know our --.

We just got all the (multiple speakers) --.

And we continue to get the high-end of the market.

You see that more is not necessarily better.

If we improve the layout of our floor, we make the place more user-friendly.

We are not fixed on flooding the world with gambling devices.

We are much more interested in creating places where people enjoy spending time.

And if they want to gamble, well, then, that is their business.

And you know, that is simple mentality works for us.

Quarter over quarter, we are at 12% down in equipment and 40% up in win.

Well, actually --.

It's a little better than the redistribution, [thank God].

You know, we get the more --.

The better customers gravitate to us.

Marc, maybe you could then comment about Vegas then, where the net slot win was down in Vegas even though the handle was up.

Was there some accounting or a number issue there that I've missed?

No.

It was just a different mix of people this year over last year.

That's the difference in our special events.

That's the difference that I see.

Marilyn, do you have any --?

We get, maybe we get a fewer big customers, and then in one particular quarter and you know here they play very high on the slots.

We've got $10,000 slot machines where you can put $30,000.

You can -- one pull could be $30,000.

And if a customer gets lucky, they win $500,000, $600,000, $800,000 a day.

So it's still a gambling hall, but Marilyn, you can give your take on it.

We've done a lot of work on in the 2nd quarter on the slot floor.

We have tried to buy some new units, do some conversions, change out the poker mix, change the participation.

And so given that, we have had some customers that were -- frankly may not find their same game that they wanted and so we are changing the floor up to make it more comfortable and be more profitable.

Okay.

Thank you.

Mario Gabelli with Gabelli & Co.

Hello, Steve.

Steve, you have witnessed the transformation of Las Vegas several times over.

As you are looking out over the next five years, other than online gambling, I'm still trying to figure out what else changes.

You know, we had some good change, we had some bad.

Matt, what do you think about Mario's question?

What I would say is that we are -- we continue to monitor the rollout of a gaming expansion in Asia and I think that over the next five to 10 years, you can see what happened in the United States in the 1990s continue to happen over there.

And that is where we are positioning a lot of our efforts.

Let's reverse the question then and that is, are you in the position of commenting on whether you considered optioning out land today, 5 1/2 half years earlier than a potential start date?

No.

In obviously some of those markets that others are interested in?

I think what is going to happen, as it did in Macau, the government makes -- these are very high-level political decisions and it requires consensus.

The government makes a decision to -- let's use Macau as a perfect example of what I think will happen elsewhere.

They make a decision to proceed, to change the rules, to allow casino gaming, integrated resorts, conventions, and entertainment and all the rest.

And then they take presentations from qualified people like the Sands Corporation, or any of the other fine companies or Genting or ourselves or Melco.

Then they have in mind where they want it to be.

It isn't driven by your ability to have a piece of land.

I had no land when we got to concession in Macau, but the government said, okay, we want to start on the peninsula here.

Sheldon Adelson was given property at Cotai because he dreamt up the idea of the Cotai Strip.

If they do that in other countries, I believe that the most important thing is that you have the credential to participate and respond to what the government needs.

These decisions will be made because they want to increase tourism, they want to create jobs, or they just want to raise some money in taxes, or a combination of all three.

When they change the law, they will invite people to present their credentials.

They will pick somebody.

And then they will make it possible, Mario, for you to have the right location.

So I don't think it is a question of getting a piece of land.

I think it is about relationships and your reputation.

I was trying to open the gate for you to comment on it.

The final, and I'll get off, is the notion of the debt in Las Vegas.

Let's say it's $1.8 billion and you have a dividend coming up, which will be paid out of the cash out of Las Vegas.

Let's assume you pay some numbers out.

What are your options with monetizing, if anything, part of your non-US asset base to shift where the debt is and the debt service and the cash flow items?

Well, why do we want to shift the debt?

The non-recourse debt in each of our subsidiaries and the parent company owns -- owes nothing, not $0.01.

That's the key.

We make sure that parent has no debt and lots of cash, and (multiple speakers) --.

I got you.

So, the debt we see for Las Vegas is non-recourse, but on the books, not of the holding company but of the various (multiple speakers) operations?

(multiple speakers).

The Company that I tried to get you to invest in, or maybe you are invested, I hope, because you are with me all of my life before here.

Wynn Resorts has debt of zero and has had a debt to zero for several years.

And we intend to keep it at zero.

We have all the capacity to do any deal we want.

See, by having a lot of cash and a parent, we can go to a new jurisdiction, infuse a subsidiary with a prudent amount of equity, make an intelligent loan that has got a reasonable ratio to the project cost, have a low interest rate with long maturity, so we don't get in the kind of trouble that our neighbors up the street have gotten into trouble on a couple of occasions.

So that is why we keep the money in the parent, the debt in the subs, and always the debt should be reasonable compared to the cash flow.

We don't want -- you know, Mario, let's go back to 2002.

When we went public in 2005.

When we opened Wynn, the project was $2.7 billion.

We had $1 billion in cash that went into that project before $1 of debt was put into the construction.

And then we had $1.7 billion in debt.

Well, with $2.7 billion, $1 billion in equity and $1.7 billion in debt, you can hardly call us overleveraged.

And I like that.

We like that conservative approach.

Because it gives us a lot of flexibility and it gives us peace of mind and we can protect our employees, we can protect our service levels, we can take good care of our properties, even if our business is lousy and the President doesn't like us.

Okay, thanks, Steve.

Good to listen to your comments and observations about Wynn in the year 2024.

Thanks, Mario.

Ladies and gentlemen, we have reached the end of the allotted time for questions and answers.

I will now turn the call back over to Mister Maddox for any final comments.

Thank you, everyone.

That's the end of the call.

Thank you all for participating in today's conference call.

You may now disconnect.