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Wynn Third Quarter Profits Show Las Vegas Quandary Within Rebound

Las Vegas casinos have experienced a tough couple of years in terms of overall revenue. The economic recession has caused Vegas casinos to come up with new ways to bring customers back to Sin City, and Wynn Resorts' third quarter revenue figures show how the promotional game can be a tricky road.

In the third quarter, Wynn posted a profit of $1.05 a share. That is not as good as most analysts had predicted, but it does show that the Vegas gaming industry is starting to come out of the slump it has been in for the past two years. Wynn would have done much better if not for baccarat revenue figures that were down.

It is not surprising to some that the baccarat figures were off of last year. The game is played mostly by Asian gamblers, many of whom have stopped their regular trips to Nevada. Instead, the Asian gamblers are staying closer to home and spending their money in Macau casinos.

"Baccarat, and even to a lesser extent, blackjack, are main games for Asian gamblers, especially the high rollers," said Gaming Analyst Steve Schwartz. "With those high rollers playing in Macau, it is impossible not to see why the baccarat numbers along the entire Las Vegas Strip, were down. Companies like Wynn and Las Vegas Sands, however, are picking the revenue up from their Asian casinos."

The two aforementioned companies were part of the movement to break the SJM Holdings monopoly on casino gambling in Macau. The government eliminated the monopoly and for the past five years, the gaming industry in Macau has been growing steadily. Several years ago, Macau passed Las Vegas as the top gaming destination in the world when it came to overall revenue. This year, Macau casinos have seen revenue increases upwards of fifty percent on a monthly basis.

Wynn understands the trade off that has to occur for the company to be successful. With the Macau Wynn casinos bringing in over seventy percent of the companies overall revenue, executives are not complaining about the small baccarat decreases seen in the third quarter. The other reason the baccarat numbers is down, according to analysts, is the amount of money players are winning. Last year, win percentage on baccarat was over twenty-two percent, but it fell to under twenty percent this year.

Wynn and other companies are not planning on stopping in Macau. With casino gambling becoming much more accepted in Asian countries, big gaming companies have started planning for casino resorts in areas such as Malaysia and Singapore.

In Las Vegas, casinos continue to struggle in their attempt to rebound from the recession. Competition from other states within the US have caused Nevada lawmakers to take the extreme measure of passing an online gambling bill earlier this year. Online casino gambling is expected to become a top form of revenue for Las Vegas casinos as soon as the federal laws prohibiting the activity are changed.

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