What: Shares of Wynn Resorts(NASDAQ:WYNN) tumbled 29% last month according to data from S&P Capital IQ. A combination of declining revenue in Macau and an embezzlement scandal involving VIP junkets sunk the stock over the second half of the month. 

WYNN Chart

WYNN data by YCharts

So what: Wynn joined Las Vegas Sands and Melco Crown Entertainment in the recent sell-off, all of whom declined on concerns about falling revenue in Macau. Revenue from the island territory dropped 33% last month, and Fitch Ratings lowered its full-year revenue projection to a drop of 33% to 34% from its original forecast of 29%.

Wynn investors were also rattled by news that as much as $258 million was stolen from a junket that brings high rollers to its Macau property. Wynn shares fell by about 10% over a three-day period after that news emerged, but then recovered after the company said that the losses were not as high as reported, revising the sum to $43 million. Still, the incident will likely add pressure on such junkets as regulators are likely to step up their oversight.  

Now what: Of all the casino stocks, Wynn has become the most dependent on the VIP market, which puts it in a precarious position as analysts expect a transition to a more mass market-led business in Macau. It's also one reason why Wynn has fallen the farthest of any casino stock recently, with 70% of its revenues coming from the region.

With another property set to open in the world's biggest gambling market next year, on the Cotai peninsula, Wynn is tying its future prospects even more closely to the Chinese gaming territory. The good news is that the revenue slide there has improved every month since February, and Fitch is expecting revenue to be flat next year, indicating stability.

Since the beginning of October, Wynn and the other casino stocks have found new life, surging in response to signals that the Chinese government may take steps to reassure the gambling-dependent Macau economy, including possibly easing visa restrictions, border-crossing requirements, and investing in infrastructure. Since Oct. 1, Wynn shares have surged over 35% on those hopes, recovering September's losses.

No one knows where Macau is headed for sure, but Wynn investors can expect the volatility to continue.

Jeremy Bowman has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.