The gaming market in the U.S. and Macau wasn't very kind to Wynn Resorts (WYNN 0.20%) in the first quarter. Not only was gaming volume down, but the company's key VIP market was also very weak compared to mass market play. Over time, Wynn will be able to win its fair share of customers -- but when VIPs quickly leave the market, the company has a tough time reacting. 

Amid the ups and downs of the everyday gaming industry, Wynn is putting the finishing touches on Encore Boston Harbor, the company's first expansion in the U.S. outside of Las Vegas. By the end of the year it may be a key contributor to earnings, and the growth may be coming just in time. 

Rendering of Wynn Boston Harbor.

Image source: Wynn Resorts.

VIPs are fleeing Macau

Macau's gaming revenue fell 0.5% in the quarter, the first bar gaming results should be compared against. On the same basis, the 9.1% increase in Wynn Palace revenue to $726.6 million looks impressive, and the 15.3% drop in Wynn Macau's revenue to $523.9 million looks disappointing. Wynn Macau was affected by some construction activity, and definitely lost market share as a result. Taken together, Wynn Macau and Wynn Palace basically showed flat revenue -- but if we dig deeper into the numbers, a trend emerges

VIP games turnover, or the volume of bets by high rollers, fell 17.9% at Wynn Palace to $12.63 billion and plunged 40.3% to $10.19 billion at Wynn Macau. This compares to a 9.3% drop in VIP baccarat (by far the largest revenue generator in Macau) win versus a year ago. 

Mass market win in Macau was up 23.9%, a sharp contrast to the lost VIP play. That's why Las Vegas Sands (LVS 2.91%), which serves mass market gaming, had a good quarter, and why Wynn Resorts struggled in the first quarter. Both companies are somewhat reliant on the trends of their core customers, which worked against Wynn Resorts last quarter. 

Las Vegas' struggles

Some of the trends in Macau spilled over to Las Vegas in the first quarter. When it came to baccarat, for example -- a game primarily played by high-rollers -- win for the Las Vegas Strip was down 31.7% in the first three months of the year, driving a 9% decline in table game win overall. Those declines are a big reason why revenue was down 7.1% overall to $431.5 million at Wynn Las Vegas, and property EBITDA fell 24% to $108.3 million. 

The weak results were driven by a 17.1% decrease in casino revenue to $111.7 million, and the big factor contributing to that was a 24.7% drop in table game drop (volume). Las Vegas has always had its ups and downs, but the first quarter was notably bad, particularly for a company like Wynn Resorts that caters to high-end baccarat players. 

Encore Boston Harbor is coming

On the growth front, the finishing touches are being put on Encore Boston Harbor, the $2.6 billion project just outside of downtown Boston. The property is still expected to open near the end of June, and it should drive both incremental revenue and EBITDA growth. 

What's still unknown is whether Boston will attract the highly profitable baccarat players that have thus far driven Las Vegas and Macau's profitability. They may be a volatile set of customers, as we saw last quarter. Wynn Resorts needs to figure out who its high-profit customers are to drive long-term growth -- and growth is something the company needs, especially if Macau's VIP market continues to falter.