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When we get the August detail later this week, the numbers will show volume share erosion.  The pressure should continue.

We’ve written a lot recently about the diverging market share trends of some of the Macau participants, particularly Wynn and MPEL.  Hold percentages can fluctuate significantly month to month and we are pretty sure hold had a big impact in August.  However, at least for Wynn, there is a little more at play here and it is worth watching.

We should get the August monthly detail sometime later this week, which should show inadequate gaming volume growth from the opening of Encore.  Combined with the low hold percentage we wrote about last week, disappointing relative volumes will contribute to another month of sub 14% market share. 

The following chart shows Wynn’s monthly market share in Macau over the last two years.  Following the mid-April opening of Encore, market share peaked at 17.4% in June but dropped precipitously to 15.0% in July.  Most of that was hold but a potential sign of trouble emerged; some of the decline was also volume related as Rolling Chip share declined 60bps sequentially.

WYNN: VOLUME SHARE UNDER PRESSURE TOO - WYNN1

August will magnify that theme and that’s the part that should trouble investors.  We think Wynn’s RC volume share stays low and possibly falls from July.  So what’s going on?  In July, it looked like Galaxy and MPEL were a little more aggressive in compensating the junkets.  That may have continued this month but we think the bigger thief may actually be MGM.  Apparently, a big Wynn VIP operator, “David Star”, opened up at MGM and may be moving some business over there.  This would undoubtedly be the work of the new head of VIP ops, Mr. Kwong, who doesn’t officially start until September but is on site already.  As we’ve written about, Mr. Kwong is a top line guy focused on stealing VIP business.  With Wynn right next door with a huge junket business, the opportunity is there.

In addition to a heightened MGM VIP effort, Wynn is at risk from LVS.  LVS has said publicly that they will be ratcheting up efforts to grow VIP share.  To our knowledge, that effort has not yet begun.  With MGM already making headway and LVS soon to try, look for the narrative to turn to Encore and its seemingly lack of incremental contribution.