Wynn Finds Stronger Competition in Macau

Like Las Vegas Sands (NYS: LVS) yesterday, the results from Wynn Resorts (NAS: WYNN) last night were good, but not as spectacular as we've seen in the past. Macau gaming revenue grew 42.2% last year, and 33.4% in the fourth quarter, but both companies lagged that growth in Macau by a wide margin.

Wynn's resort saw revenue rise just 9.1% in the quarter to $995.5 million and adjusted EBITDA rose only 5.5% to $313.1 million. If Las Vegas Sands and Wynn's results are any indication, it appears that gaming dollars are moving to Cotai, where The Venetian Macau and Melco Crown's (NAS: MPEL) City of Dreams are performing well, and Galaxy Macau looks like its hitting stride quickly. CEO Steve Wynn was very complimentary of these resorts, saying they had upped the level of competition in Macau, making it harder for all operators.

Stateside, Las Vegas was quite impressive considering the economic backdrop in the town. Revenue grew 7.2% to $348.4 million, helped by an 11.7% growth in room revenues. Adjusted property EBITDA was $89.1 million, an impressive 30.3% growth from 2010. Right now, it appears that Wynn is outperforming Strip rivals Las Vegas Sands and MGM Resorts (NYS: MGM) with its higher-end offerings.

Future growth
Wynn has been in the news for exploring a resort in Massachusetts, and on the conference call, CEO Steve Wynn was tepid in his response. There is interest in growing the company's U.S. footprint, but the return on investment will need to meet the company's standards. Right now, it sounds like there are too many questions outstanding to make any solid predictions about a potential project for Wynn.

Macau, on the other hand, is a different story. The company continues to design and plan for its Cotai development, and investors are left wondering when it will take the next step. But Wynn and MGM are left waiting for government approvals for their Cotai developments, and it's anyone's guess when that's going to happen.

Or maybe investors are tired of trying to chase one geographic gaming region after another. It feels like the growth has gone from Vegas, to Macau, then back. Add in Singapore to the mix and it can be hard to remember where you should place your chips. If that's the case, you could also look at International Game Technology (NYS: IGT) . The company could be a great broad market play, especially if online gaming becomes legalized. Their acquisition of Double Down could be a great boon as well. The move gives them an in with the bricks and mortar casinos through slot machine sales, and positions them for growth should online gaming take off.

Foolish bottom line
Wynn is still one of the top gaming stocks because of its strong balance sheet and solid market position. But the company is going to have to find a way to grow share in Macau as competitors get stronger by the day. If anyone can do it, it's Steve Wynn, who has a history of outperformance in the gaming industry.

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At the time thisarticle was published Fool contributorTravis Hoiumdoes not have a position in any company mentioned. You can follow Travis on Twitter at@FlushDrawFool, check out hispersonal stock holdingsor follow his CAPS picks atTMFFlushDraw.

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