Wynn Resorts founder Steve Wynn

What drives the power of this place is non-casino attractions ... what allows you to build them in a very extravagant way is the money that the casino throws off.

By Kim Jae-kyoung

MACAU ― Even for casino mogul Steve Wynn, betting is not an easy way to make money. Throughout his life, he has played various casino games, including baccarat and blackjack, but he said he often lost money and screwed up. Simply put, he has never won the jackpot at casinos.

This is a big irony as he has made billions of dollars by developing a number of integrated resorts (IR) equipped with casinos both in the United States and Asia over the past decade. He built Wynn Las Vegas in 2005 and Wynn Macau in 2006. He also opened Encore Tower in Macau in 2010. According to Wynn, the only way to win money in a casino is to own one.

The founder and owner of the Wynn Resorts has invested more than $2 billion in developing IRs in Asia over the past few years and has had huge successes so far. Last year he was chosen among the Barron’s world’s top 30 CEOs for his achievements in Asia. The amount of money he makes in Macau is now about a triple that in the U.S.

Many people call him a “casino mogul” or “casino magnate,” but he does not see himself that way. He defines himself as a “developer,” not a businessman engaged in the gambling business. He said Walt Disney, the founder of Walt Disney Productions, is his hero.

“I have never paid much attention to the gaming part as part of my driving force. My goal is always to create a place that will make people go and say wow,” Wynn said in an exclusive interview with Business Focus at his office in the Wynn Macau resort on Jan. 12. The resort, owned by Wynn Resorts, is the first Las Vegas-style integrated resort in Asia.

“The casino business gave me the opportunity to build unbelievable resorts that would not be possible without the gaming attached to them. We do our own design and interiors in the house. We do our own work and I do the drawing. If you ask who I am, I’m a developer. That’s what I love doing,” he added.

He doesn’t encourage individuals to gamble because he knows they can’t make money. But he encourages governments to develop IRs because a casino makes it possible to create a large-scale resort that can have positive spill-over effects on the entire economy.

Now the Las Vegas developer considers his empire as an Asian company and is fixing his eyes on South Korea to develop another IR. He is cautious about investment in Korea because he is well aware of Korean people’s concerns, but he failed to hide his zeal to bring his brand here.

“I think we are an Asian company now. Where would be our best opportunity (next)? I absolutely think South Korea is terrific. Las Vegas, Macau and next is the greater Seoul area,” Wynn said.

“If we come to Korea, we will build a beautiful destination resort that integrates entertainment, conventions, meetings and shopping centers.”

Wynn played a crucial role in the 1990s resurgence and expansion of the Las Vegas strip. He built many iconic resorts in Las Vegas, including The Mirage, Treasure Island and Bellagio. After securing casino licenses from the Chinese government in 2002, he first invested in Asia to develop Wynn Macau and Encore Tower.

Integrated resort and casino

Despite Wynn’s proven track record to transform gambling cities ― Las Vegas and Macau ― into famous resorts and convention destinations, the casino developer’s move to develop an IR in Korea doesn’t look easy.

Casino gaming is still a taboo in Korea. Local laws prohibit Koreans from entering most casinos. There are 17 here but only one of them ― Kangwonland ― is open to locals. The rest are only for foreign tourists. Only Kangwonland allows a Korean national to freely enter.

There are enough reasons for the restriction. Policymakers and activist groups are voicing concerns about the side effects of casinos, such as compulsive gambling, money laundering and loan sharks. Opponents cite Kangwonland as a good example.

Opening a casino for the local population has become a “hot potato” here after several operators of integrated resorts, including those who have already invested in Macau and Singapore, have indicated their willingness to invest in Korea. They claim that Kangwonland failed because it lacks non-casino facilities.

Wynn is one of the global casino moguls who are eager to develop integrated resorts in Korea but balk at investing due to local laws. He stresses that the key driver that attracts a large number of people to integrated resorts are non-casino facilities, not gambling.

“What drives the power of this place (his resort) is non-casino attractions ― the service, the rooms, the spas, the restaurants and the entertainment. What allows you to build them in a very extravagant way is the money that the casino throws off,” Wynn said.

“The casino is the best cash register in the building, but the gaming device ― a slot machine or a baccarat table ― is nothing. They are all the same everywhere in the world.” In the Wynn resorts, casino space is only 8 percent but it makes more than 90 percent of its revenue.

An IR is a resort with a wide variety of leisure and entertainment attractions, including theme parks, casinos, shopping centers, restaurants, hotels and convention halls all housed in one area.

The new type of resort is gaining attention among Asian governments after Singapore and Macau successfully boosted their tourism industries following the establishment of IRs over the past few years. Leading IR developers, including Wynn, Las Vegas Sands and MGM are looking for opportunities to develop new resorts in the explosive Asian casino market.

“So for me the casino is what makes things possible on the scale that otherwise will not be possible. So the casino is the critical part that makes non-casino possible on a big scale,” he added.

Wynn points out that traditional hotels could never afford to make the kind of place that he can because they don’t have the extra revenue.

The biggest hurdle to his investment in Korea is that it is currently illegal. “We are looking to create a resort that is open to Koreans and everybody, not just visitors. In order to build a place that has the scale of attractions, it has to employee a lot of people. Without the opportunity to have local customers, you can’t keep it alive and meet the payroll and other expenses.”

Regulated gaming

Wynn said that the ban on casino gambling doesn’t help reduce illegal betting or boost economic activity. In Wynn’s view, people don’t come to integrated resorts for gambling; they come for the experience of the resort. In fact, in Macau, locals rarely visit such resorts for gaming. They go there to use non-casino facilities, such as shopping centers and restaurants.

“Regulated gaming brings it out of the darkness into the light. Right now you’ve got the 20 trillion won industry in Korea in legal gaming and a 60 trillion won industry in illegal gambling. An Illegal casino doesn’t do the employment, doesn’t bring people from outside, doesn’t pay the taxes, doesn’t create all the jobs, just the gambling place,” he said.

“Illegal gambling just picks the money out of the economy and it doesn’t get circulated. They don’t create any economic secondary activities, which is very important.”

Wynn believes that the negative social impact of such facilities would not be high if they introduce proper regulatory programs as well as appointing reliable casino managers, as Singapore has successfully done.

The Singapore government charges Singapore nationals 100 Singaporean dollars for every 24 hours of their stay at the casino. In contrast, Kangwonland in Korea allows for an adult with Korean nationality to freely enter the casino with an entrance fee of only 5,000 won. Koreans are also not restricted to a betting limit in Kangwonland.

Wynn said that the regulated gaming can create more jobs in the casino itself and other sectors _ the food beverage, retail, accounting and computer departments, and all of these are about careers for people who live in the country.

He noted that if a casino creates one job, there will be three created in the community and that’s been the proven experience in Las Vegas, Nevada for 50 years.

“So I employ 10,000 people in the casino, which creates another 30,000 jobs in the community. So it brings people outside of the city into the city, so we are like exporting. If I were in South Korea, I’ll be like Hyundai,” he said.

“I would cause the money coming outside of the country into the country. That’s what we are supposed to do here in Macao, and we reinvest the money in the community, we build two hotels here, and we are building the third one now.”

Singapore case

Singapore is often cited as an economic model for Korea in many aspects. Since both countries are small and lack natural resources, they have been striving to seek ways to boost economic growth.

In 2010, Singapore took bold moves to open two integrated resorts ― Marina Bay Sands and Resorts World Sentosa ― to attract large number of tourists. The Genting Group of Malaysia and Las Vegas Sands of the United States each invested approximately $4 billion to $6 billion, respectively, in the resorts.

Prime Minister of Singapore Lee Hsien Loong once said, “The revival of tourism in Singapore was due to the opening of an integrated resort, which led to the overall recovery of our economy.” According to data released by the Singapore government, a total of 33,000 new jobs were created in 2010 with a sharp increase in domestic consumption.

In Singapore, the move to build casinos first faced severe oppositions from residents. Several religious and civic groups, as well as the opposition party, strongly expressed their disapproval.

Despite such strong protests, the Singaporean government pushed for its plan to develop IRs by introducing proper regulations to avoid the negative social effects ― such as allowing family members of gamers to block them from entering; and prohibiting casinos from extending credit to the local population.

Wynn indicates that Korea should take a hint from Singapore and focus more on the economic benefits of IRs as side effects can be kept under control through proper regulation.

“Korea has a (gambling) problem of certain size not very much but for certain size of gambling addiction today, you won’t have any more if you regulate it. But you will get all the economic benefits of jobs, tourism and development if you do it,” Wynn said.

“However, you are not going to make the problem smaller by making it illegal. You’ve got the problem in Korea, and there is nothing you could do about it because this is something that people have in there, kind of chemistry.”

Korea is next destination

The 70-year-old business guru said that South Korea, particularly the Seoul metropolitan area, is his next destination to develop an IR. He said that he is ready to invest a total of $2 billion to $3 billion in Korea once legal barriers are cleared.

Wynn visited Korea last year to conduct a feasibility study on the Seoul metropolitan area. He also met ranking officials here, including the mayor of Incheon.

“If I could go to Seoul, I would build an entertainment convention complex to attract people from all over the world, which will be different from Wynn Macau. I would have a much bigger convention component,” he said.

“I’m an entrepreneur. I take risks. I wouldn’t hesitate to spend billions of dollars in Seoul if the government clears legal issues. I would commit to the Korean government the resources in my company. If I were invited to Korea, I will be there in a second.”

Wynn played a crucial role in the 1990s resurgence and expansion of the Las Vegas strip. He built many iconic resorts in Las Vegas, including The Mirage, Treasure Island and Bellagio. After securing casino licenses from the Chinese government in 2002, he first invested in Asia to develop Wynn Macau and Encore Tower.