LAS VEGAS – Casino operator Wynn Resorts Ltd. said Tuesday it lost $159.6 million in the fourth quarter of 2008 as its gambling revenue plunged and it paid $98.8 million in taxes.
The loss Wynn reported after the market closed compares with net income of $65.5 million in the fourth quarter of 2007. Wynn said it lost $1.49 per basic share during the last three months of 2008 compared with income of 58 cents per share a year earlier.
Billionaire chief executive Steve Wynn told investors during a conference call that he believes casino customers’ habits are changing.
“People are being more cautious — when they win, they’re playing for shorter periods of time,” Wynn said. “A blackjack player gets up or a baccarat player gets up at the table, he jumps up and leaves if he’s a winner, whereas before they said, ‘Oh boy, we got the house’s money, let’s play longer.'”
In Las Vegas, Wynn’s gambling revenue was $479.7 million for the full year, 25.3 percent below 2007. The decline was even sharper in the fourth quarter — 43 percent below the same period in 2007 — to $90.7 million.
Non-gambling revenue on the Strip was $776.3 million in 2008, down just 3.7 percent from 2007.
Companywide, Wynn Resorts said its gambling revenue was $456 million in the fourth quarter, down 13 percent compared with a year earlier.
For the full year, the Las Vegas-based company says its net income was $210.2 million, or $1.94 per basic share, compared with $258.1 million, or $2.43 per share in 2007.
Wynn Resorts, which owns casinos in Las Vegas and the Chinese gambling enclave of Macau, said the large tax expense resulted from a company review of its ability to realize future tax benefits.
The company said it learned during the fourth quarter that it could not keep its room rates high and expect its Las Vegas hotels to remain full. But Wynn also said lowering rates is not necessarily best for business.
“Occupancy in and of itself is not the answer. We need people in our beds, in our rooms that can afford our restaurants and our various other amenities,” Wynn said. “If we don’t have that, then our non-casino revenue expectations per occupied room blow up, and that’s no good.”
The company, which opened the $2.3 billion Encore Las Vegas resort on Dec. 22, said the opening did not significantly affect the quarterly results. Chief Financial Officer Matt Maddox said the company had $120 million in outstanding costs for the project as of Tuesday.
Wynn said he told company officials before the Encore opened to drop prices to whatever was needed to ensure an animated opening, but he said the company has backed off that approach, opting for the wealthiest spenders instead.
“We’re not hunting with a shotgun, we’re hunting with a telescopic rifle again,” he said.
The company said it plans to turn its focus to opening the $700 million Encore Macau casino in 2010, with 400 luxury suites and four villas. The company said it planned to fund the project with cash on hand and revenue from Wynn Macau.
The company said it had $1.1 billion cash on hand at the end of 2008 and $4.3 billion in total debt. Maddox said Wynn Resorts planned to spend between $35 million and $40 million in capital expenditures and maintenance between its three existing properties in 2009.
Wynn shares, which closed the regular trading session Tuesday up 10.8 percent at $25.80, were trading at $20.75 after hours.
