The gambling business is booming in the U.S., with a record $53 billion in revenue for casinos across the country in 2021 and $7.1 billion on the Las Vegas Strip. COVID-19 led to a tough start to the year, but by summer, records were being busted across the country.
Macao has been a different story, with major restrictions on travel and social activities still ongoing. Gaming revenue was down 70% between 2019 to 2021 and still doesn't show signs of recovering to previous levels.
The trends are evident in Wynn Resorts' (WYNN -1.78%) recent earnings and show both the challenges and opportunities for this casino stock.
Image source: Getty Images.
Las Vegas is back
There's not much to complain about in Las Vegas these days. Wynn's Las Vegas operations reported $493.9 million in revenue and property EBITDA of $186.2 million in the fourth quarter, which is higher than a typical quarter pre-pandemic.
Fourth-quarter 2021 casino, hotel room, food and beverage, and entertainment revenue were all higher than levels in the same quarter in 2019. What's notable is that these record results are happening despite the fact that big conventions still haven't come back to Las Vegas in large numbers. If conventions do eventually return, there's even more upside ahead.
Encore Boston Harbor was also back to more normal levels of activity. Revenue was $204 million and EBITDA was $68.2 million, above Q4 2019's $169.3 million in revenue and EBITDA of $15.3 million.
Macao is where the money is
Before the pandemic began, Macao was where most of Wynn Resorts' cash flow came from. In 2019, Macao property EBITDA was $1.38 billion and in 2021 it was just $95.9 million.
Revenue at Wynn Palace actually fell 12.4% in the fourth quarter to $194 million and property EBITDA was -$1.4 million. Wynn Macao revenue was down 27.6% to $131.7 million, and EBITDA was -$24.5 million.
It's not clear when Macao will recover, given the more restrictive measures in Asia compared to the U.S. But Wynn has invested billions of dollars in the region, so it's not about to give up now, especially with concession renewals coming up in the next few months.
Where is the gaming industry headed now?
I think the U.S. has shown how quickly gamblers will come back to casinos once restrictions are lifted. But it's not at all clear when China and Macao will return to "normal" activities. For now, Wynn Resorts will need to rely on U.S. casinos for cash flow. It's a good thing they're performing well, because Macao's days as a cash flow machine still seem a long way off.
