Good afternoon. My name is Nicole and I will be your conference operator today. At this time, I would like to welcome everyone to the second quarter earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. I would now like to turn the call over to Stephen Cootey, Chief Financial Officer.

Thank you very much and good afternoon. Joining the call on behalf of the company today are Steve Wynn, Matt Maddox, Kim Sinatra and myself here in Las Vegas. Also on the phone are the operational management teams from both – our Boston, Las Vegas and Macau properties. Before we get started, I just wanted to remind everyone that we will be making forward-looking statements under Safe Harbor federal securities law and those statements may or may not come true. And with that, I’m going to turn the call over to Mr. Wynn.

Hello, everybody. And it’s very nice to have this call. I think you’ve seen our earnings that we were happy with Macau. We held a high, but we made $20 million more than we did last year and it’s another increase in our quarter. And even though we held a high, we were also carrying an equal amount of extra payroll for the Palace, which opens next month. So the increase is real. We’ll be transferring all those employees in the next few weeks – in the next few days actually. And so, we’ll have a different expense pattern for the Peninsula operation of Wynn and Encore in the months ahead as we equalize the payroll. I think we mentioned table allocations in our press release and I’d like to take a moment or two to comment upon those and give some insight to those 160-odd people that are on this call according to the operator. We haven't analyzed, in the past, as we headed towards the opening. We’re unable because of the table cap to predict how many tables we would get, so we established, long time ago, various scenarios where we could operate from 100 tables to 280 tables, and new tables, on how to operate both hotels – all three of them actually – efficiently and profitably. Some of the things that you may find interesting, for example, in a recent month – and this is pretty typical – we had 180 tables allocated at Wynn and Encore to VIP to junkets. And then, we analyzed, as we do now, for the past year, we’ve had a completely different focus in this company about the gambling activity of our clientele. And instead of analyzing the casino on Wynn or turnover, we’ve analyzed both in the United States…

[Operator Instructions] Our first question is from Joe Greff from JP Morgan.

Hello, everybody. Steve, thanks for your comments, your perspective putting on the top of the table game allocation. Along the same lines, along the same topic, does – the fewer initial amount of table games than, say, 150 to 250 that maybe some people were thinking, does that alter the amount of labor-related OpEx shift from Peninsula to Cotai?

Ultimately, depending on utilization, it will as it always does. You adjust your workforce based upon the demand that you have from your customers. But that’s something that you see as time goes by, Joe.

Got it. And then, just to make sure we all understand this, is there a chance that you could open with more than 100 and – I ask it knowing that Galaxy, I guess, went through a process, maybe got a little bit more to open and then got 50 more and then 50 more after that. Do you have a timetable for when more tables would be released? I guess, with a second go around of additional table games being allocated, would that be more of a 2017 event or could that be a late 2016 event?

Joe, we haven't been formally notified in the manner that the government does such things yet, and I suppose it is possible. What we do in the absence of official notification is we make plans to run at a minimum efficiently; and then, if demand calls for it and the government decides that it’s a good idea, then we respond when they give us the tables. But they don't tell us, in advance, about such things. And so, the best thing for us to do is not to plan for it.

Got it. And then a final question for Steve Cootey. Can you allocate the EBITDA impact, the positive favorable EBITDA impact, in Macau from the high hold?

About $20 million.

It was about the same as the extra payroll we’re carrying, Joe.

Yep, yep. [indiscernible] just wanted to clarify that. Great. Thanks all.

And our next question is from Shaun Kelley from Bank of America.

Hi. Good afternoon. Maybe just to follow-up on that payroll comment, so the $20 million of extra headcount that was being carried, that’s still – those are all employees that are currently at Wynn Macau, will be shifted over to the Palace. And then, in addition, was there additional staffing that’s going – that’s feeding the pre-opening line, which is why we saw that expand?

Let me clarify that. We were carrying $20 million to $25 million a quarter of extra payroll in the Peninsula operation for Macau. All of those people are being transferred, as we speak, and they are employed at the current table limit level. The extra tables, were we to get them, would have been reflected in new hires which have not taken place. So the people that we said we’re transferring, we are transferring and they are employed. Does that answer your question? I want to make sure I’m responding properly.

And I think from an accounting standpoint, what you’re talking about, Shaun, is, to be clear, Wynn Palace will have 7,000 employees; roughly, 2,000 will come from Wynn Macau. So when you see pre-opening ramping up, that’s the other 5,000 people that are coming on-board right now and came on-board in the second quarter. That’s that $40 million in pre-opening out of the $45 million. It was related to Wynn Palace hires outside of the transfers.

Perfect. No, I understand. That makes perfect sense. And my second question would just be on, we look a little closer at the VIP line, it looks like perhaps the rebate percentage was a little higher than normal. Usually, that may have to do with what’s going on in the direct VIP business, but any color you could provide on that?

There was no change in commission structures in the second quarter.

Yeah, you got me on that one. I’m not sure what line you’re looking at. Linda is on the call or Ian is. Ian, do you have a comment on that?

We haven't altered our commission structure. It remains the same. We’re very parsimonious. I’m not sure what’s being referred to.

No, just sorry. Maybe to be more clear, just asking about, was there any kind of hold outside of the norm on the direct VIP business?

Was there any hold? You mean, did we play lucky?

Yes.

We did.

We did.

We did. I did to the extent – I think we played lucky almost exactly to the extent of the extra payroll we were carrying. So what I’m saying is the $20 million increase is real.

We played lucky in both direct and junket, both sides. They make up that combined number of 3.98% or percentage [ph].

Okay. Got it. Thank you very much.

And our next question is from Carlo Santarelli from Deutsche Bank.

Thanks, guys. Matt, for starters, you just mentioned playing lucky in both direct and VIP and junket. Could you maybe clarify a little bit what the mix in terms of drop or something is of the two segments at this point?

Carlo, we normally don't do that, getting into the mix of direct versus VIP. We always – I can tell you, both held high in the 3.98% on the $11 billion in turnover.

Generally, what is relevant to this conversation is that we have three or four very priced junket operators, who consistently produce for us and produce profitable business for us compared to any other equipment in the building. And they’re going to be both – they’re all established with proper tables in both Cotai and in the Peninsula, in August, at the opening regardless of anything that we’ve discussed so far. But we also run our own program, very much like we do in Las Vegas, where we give credit to people in Hong Kong where we’re permitted to do so. And those numbers jump up and down depending on who shows up. To give you an example, in the last week in Las Vegas, in five days, we won $22 million in our own program in baccarat from a handful of customers. So we get this – we benefit from having an extremely loyal, high-end group of customers that come to us in a number of ways, some through junkets in China and some in our own programs here. And they vary – the volatility or the attendance of such clientele varies unpredictably from month to month and week to week. So the reason we don't discuss it is because it would be irrelevant. It’s not instructive and it’s unpredictable.

Okay.

Which is why we don't give guidance on it because we really don't know what to say other than what I've just told you.

Great. That's helpful. And then, if I could just understand a little bit more how you’re thinking about the positioning. You’ll, obviously, open Wynn Palace with 350. If I’m not mistaken, your allocation or your table allotment coming, it was like 509 or somewhere around there, plus the 100 is 609.

It’s 520 plus 100. It’s 620.

620. Okay, sorry about that. So you’ll have 270 at the existing, plus your 350, how are you thinking about the splits between mass and VIP at each of the properties now? Will you try and lean more heavily…?

60 or so in both hotels in the junkets and VIP. And the rest are in mass. So the mass floor is unaffected.

Great. Perfect. Thank you very much.

The adjustment takes place in the VIP section.

Understood. Thank you.

And our next question is from Jon Oh from CLSA.

Thank you. My question pertains to the 250 tables that you are shifting from Wynn Macau. I think this number is a little higher than what we are modeling generally speaking. So as I am thinking about the cost shift and the expense shift that will be moving from Wynn Macau to Wynn Palace, that’s a positive thing. How should we also be thinking about the potential that you’re actually peeling off more of Wynn Macau's tables and what it would do to your revenue of your existing Wynn Macau? Basically, I'm trying to understand, this risk of self-cannibalization, which I think, Steve, you brought to point that maybe only 60 tables out of the 183 in VIP are contributing to the profits, so you have some slack to pick up there. But what about some of the mass market tables and premium mass market tables in existing Wynn Macau today that you may have to shift to get Wynn Palace to the right size? How do you feel about this risk of self-cannibalization in the coming weeks as you open Wynn Palace?

Well, that’s the good news. The shift is irrelevant because the tables that are left at Wynn Las Vegas are the ones that – and in Encore are the ones that were making the money. We’re not touching the mass floor. That’s the point. We had an enormous amount of tables that were idle with payroll in anticipation of the shift to the other place. So, in one way, it’s fortuitous that we’re not affecting our premium mass capacity or potential in terms of tables at Wynn Macau and Encore Macau. The adjustment was made in the junkets and sending out the junket operators and the tables they allocated to them. Our mass floor doesn't change. Our premium mass floor doesn't change in either place.

What you see, Jon, is if you look at the numbers, we have some poker games that are more of an amenity that would likely go. That’s about 14. And then, of the 20 or so mass games that would need to be transferred to get to those numbers, those are underperforming games in certain areas that we rarely open. So… This may be a fascinating – those of you who watch this industry so closely, and our competitors as well, may find this to be a fascinating observation. When we concentrate this business on the tables that we have predetermined to be the ones that are most profitable and increase their utilization, some of this speculation has to remain as speculation, but I think you’re going to see the results quick enough in August, the last week in August and in September leading up to Golden Week. And I think that we might find this very instructive before it’s over. And we don't do much spinning here. We let the numbers speak for themselves. But I want to point out that the trend in our industry has constantly been to less equipment and more efficient utilization of that equipment. I also want to remind everybody that you cannot get dynamic in a casino. You can only get dynamic in the non-casino area where you create attractions that produce people of a certain income level that make the place profitable. I can't overstate that simple observation more strongly enough. In a hotel casino, in these integrated resorts, the hotel itself is the show. A lot of conversation has been promulgated about the diversification of gaming away from just gambling to non-gambling things, and that conversation has widely and largely been misunderstood. So let me make a point about that now.…

Okay, thank you for the color. If I may follow-up with another question, I think you made a statement earlier about premium mass and it seems like that’s going to be the front and center of the Wynn Palace strategy. Could you size up the state of the premium mass market today, specifically if you could maybe give us some sense as to some visitation trends you’re seeing and also customer spend? Are you seeing any encouraging signs right now? And how do you feel about the state of this market. We know your position very well given the product that you’re building, but any color on premium mass as a segment will be very helpful to us. Thank you.

Ian Coughlan, my Irish boss, do =you want to talk?

Sure. What we’ve seen in premium mass at Wynn Macau, specifically, is very sticky customers. And we’ve been allowed, over the last 18 months, to grow the mid-tier premium mass. We’ve cultivated a lot of new players. It’s been very strong for us. We’ve allocated more tables to premium mass and it suits the property. So they’re our type of customers. It’s been running very well. And we’re very confident about premium mass at Wynn Palace. We have the product to support it and we’ve built the place for our premium mass and Wynn Macau is no different. So we are seeing, finally, a return of some of the higher-end premium mass players. We’ve seen that particularly over the last eight weeks. So it’s strong, it’s steady, it’s stable, and we’re looking forward to Wynn Palace and Cotai being a different market with lots of premium mass there to harvest.

And, Jon, on all three months – April, May, and June – we were up in the mass segment year-over-year.

Thank you. That’s very helpful.

Who’s next?

Our next question is from Felicia Hendrix from Barclays.

Hi. Good afternoon. I just want to switch gears for a second, if I may, because my question is on capital allocation. So, Steve, so you’re opening up Wynn Palace in about a month, a little less than a month, right? And then, we move to Boston and – by the way, congratulations on getting closer to commencing construction there. So in a few years, Boston will be open. And then, following those two projects, you should be back to generating strong free cash flow. The next project in line is, obviously, Paradise Park if that gets approved. So I'm just wondering, how do we think about your free cash flow as you’re building out that project in Vegas? Is there a scenario where you’re returning cash to shareholders, while you’re also embarking on construction in Vegas once Boston is open?

Felicia, I think we always return cash to shareholders and we’ll continue as long as our business remains robust to pay dividends. That’s been our policy from the beginning of this company. And once – as you look at our balance sheet, it becomes quite strong, we expect, over the next 12 months and our capital allocation will be exactly what it’s been.

We’re in construction, Felicia, and we have been for several weeks on our Wynn Plaza shopping center on the Strip, on the sidewalk on the Strip between Wynn and Encore. So we’re very happy with that and the leasing is proceeding and that project is underway and will finish next year.

Okay. I'm sorry.

I'm sorry. That’s all. I just wanted to throw that in. We did start that job and it’s going well. Okay, great. And then, Steve, so when we think about Macau, right, and a lot of the questions, I think, that were being asked today are kind of coming from the base of people trying to figure out what’s going to happen in the very near term, right? Like, is the new supply going to grow or cannibalize the market? And that’s an interesting debate. But when we look out further, a year, two years out, and given the stabilization the market is seeing now, especially given the market – the stabilization that the market is seeing now, do you feel more comfortable about your growth projections for the market as you look out a few years? And just as a follow-up to that, how much of your vision in Macau relies on proper infrastructure being in place, like the bridge and the light rail, that sort of thing?

Well, we’re seeing numbers today that have no bridge, no monorail, none of those remarkable infrastructure additions that the government has instigated. They’ve not yet matured and come into season. So what we’re seeing is the picture that you’re sharing with us at the moment based upon the numbers from ourselves and the other gents and the other companies in Macau. The things that are in the pipeline, the bridges, it’s mightily being constructed. Monorail, with its growing pains, seems to be settling in and work is proceeding on that. Those things all add to the viability of all of the operators in the special administrative region. And they can do nothing but help as far as I understand them. All they can do is make it easier for more people to get to Macau. The penetration of Macau in terms of the general population is still small. The room for growth is astronomical when you consider coming to play and how many folks there are. The visitation in Macau is being augmented and enhanced not only by these infrastructure projects that are breathtaking, that bridge and the monorail, the light rail, but by the very facilities that the concessionaires have invested in and that have opened. Galaxy and Venetian and the City of Dreams and the Studio City are very aggressive, massive projects. And then Parisian comes on shortly and then, eventually, we’ll have the SJM property, which I think they’ve, in a stroke of real originality, called The Palace. That comes on at some time next year, I guess. When is that due, Matt?

I'm not sure. I think it’s further out.

Further out. But the Parisian is around the corner.

It’s a couple of weeks after us.

Yeah. So those things match and enhance the future of the market, coupled with those infrastructure things that you mentioned. Now, I don't know the final date of the bridge. Have they announced one lately when they expect to function, to have functionality on the bridge? I know the light rail – when?

2020 or 2021. It keeps moving.

Yeah, in three or four years. And what about the light rail, Ian?

2018, first phase; 2019, the second phase.

The first phase goes around two sides of our property and has its first stop right in the middle of the lake by our gondola station. That’s the first stop from the ferry terminal. And it goes around the north and the west side of our property and stops right smack in the middle next to our gondola station. No exit there, of course. We did it deliberately. And then that gondola station feeds the MGM which is coming along in a few months. It feeds Parisian. It feeds the City of Dreams and Wynn, the Palace. So I like the interaction of the infrastructure as it comes on-board and it sort of matches and enhances the performance of the buildings and the projects that have been built. That’s how I look at it, anyway. It’s just sort of a – but I tend to be a longer-range looker at these things than quarter-to-quarter, but that’s my job here. So I’m feeling good about it. I love our position in Macau. That concession was one of the most remarkable benefits ever bestowed on companies. Those of us who are privileged to have such privileges in the SAR are very lucky. The amount of money we’ve been able to make and the opportunity to create these places has been fabulous.

Well, thank you.

Yeah. Is there another question? Apparently not.

I think there is.

Is there another question?

Yeah.

Our next question is from Thomas Allen from Morgan Stanley.

Hey, how are you? So you announced about a month ago the opening date of Wynn Palace and you started booking rooms, can you give us any color around bookings? You also have been hiring hosts. Any color you’re hearing from hosts on potentially pent-up demand of people who haven't been coming to the market and maybe will start coming again once the Wynn Palace opens? Thank you.

I think we’re at 70% occupancy already and we’ve only had the booking machine turned on for a matter of days.

June 21, Steve, we’ve started online sales and taken reservations. And we’ve had a strong demand basically and our rate is at a premium on both the gaming and the non-gaming. So we're looking very, very strong for the first five weeks prior to Golden Week and then we go up from there into the 80s.

That's helpful color. Thank you. And then, just talk about the Macau Peninsula property. Your slot volumes are really weak this quarter. I think it’s the weakest number I have seen or we’ve seen since 2009, anything driving that?

Just the movement of big players. They can affect the month and they can affect the quarter. So the previous quarter was excellent, so they’ll be coming back.

The slot machines are very much like the tables. There are very big slot players in China. And in our particular case, when they show up, it gets very exciting. When they don't, it’s a little bit more subdued.

Thank you very much.

Our next question is from Robin Farley from UBS.

Great, thanks. I have two questions. One is, how should we think about, for the Palace, what percent of rooms will be sold cash sales versus given to players, just how to think about that. And then, also, I wonder how you think about how the US election outcome may impact business in Vegas?

What a good question that is, Robin. I’ll take the second question. Yeah, go ahead, Ian.

Steve, this is Gamal. We initially planned for the initial period to be at 30% non-gaming or cash business and 70% gaming and then we will eventually get into a 75% gaming, 25% cash business.

Okay, great.

The election in the United States, I think we’re all in the same position. It’s almost impossible to predict exactly what effect that will have. Without getting into an economics discussion, we have – sooner or later, our political establishment is going to be forced, regardless of party affiliation, to deal with $19 trillion in debt that’s climbing by around $1.6 billion a day. That means that, in the Treasury auction each month in downtown Washington, we’re printing money at the rate of $40 billion or $50 billion a month, which is, of course, increasing the money supply and directly impacting the living standard or the buying power of the US dollar or people who are being paid like everybody on this call today. Now, part of the frustration in America is the fact that the deficit is having an enormous impact on the living style and the living standard of Americans, but not all of this is well understood by the folks, to use Bill O'Reilly's term. The folks are being – their living standard being clipped by the deficit and by the printing of money and the increase in the money supply. How long can this go on? In the history of the Western world, inflating your way out of this kind of a problem, taken to its extreme, to use the Weimar Republic as an example, people went grocery shopping with wheelbarrows full of currency. Now, before the recession, the euro was $0.87, $0.85 on the dollar. During Quantitative Easing 1, 2 and 3, it went up to $1.48. That was a devaluation of the American currency by 20%. Now, it’s $1.10. And to use that as a benchmark for a moment, it isn't that the dollar got stronger, it’s that the euro got weaker because they…

Okay, thank you.

Robin…

And our next question is from David Katz…

I want to say something to Robin. Robin, there's 465 agencies in government and there's 4.15 million federal employees. 1.5 million are in uniform. 2.65 million of them are civilians covered by the SCI Union and the Civil Service Act. If you want to make government more efficient, you’ve got to have a big idea that resonates with all of the government employees, all 2.65 million of them and 460 agencies and it is going to have to be the kind of big idea that we used to run businesses, which is namely to reinforce positively the behavior that we wish to encourage. And that can be done with tax policy and with employment techniques in the federal government that works so well in the private sector. If we told everybody in those 465 agencies, you ran the business for X amount of dollars last year. If you maintain service levels and you can save a dollar, we will distribute $0.20 on every dollar you save to those of you in those departments, you’d see the government contract in terms of its cost of operation overnight. But you’d have to incentivize the people in those 2.65 million employees the way we incentivize people in the private sector and gain efficiency and better functionality. But those big ideas don't seem to apply in Washington. Enough of the speech. Go ahead with the questions.

Our next question is from David Katz from Telsey Group.

Hi, afternoon. Two quick ones. Now that Boston is becoming more of a tangible property and that this may involve getting Bob into the act, I’m curious how you can update us on how you plan to position it. As we look around the geographic region, there are other large properties, other small ones, but I think they tend to be more slot driven, if you can talk about who your target market is. And then, I'm curious what your kind of long-term commentary might be around the table game business in Las Vegas, which candidly has been a little bit hard to model. Whatever thoughts you have would be welcome. Thank you.

Bob and I will do that together and I’ll lead. That building in Massachusetts is the Wynn in every sense of the word – the rooms, the suites, the service, the food, the beverage, the public entertainment, the theatrical entertainment is everything that we do here. We’re bringing a five-star, frontline, integrated resort right into the center of Massachusetts. We're the largest private investment in the history of that commonwealth and we are the second biggest employer except for the hospitals in the commonwealth. And it’s going to be a doozy. And it’ll deal to the same level of the market that we are dealing here. Bob DeSalvio, we’re very lucky to get him come join us. I was with him this week on the East Coast in Pennsylvania. And, Bob, you can pick it up from there.

Sure. We think of this market in a couple of different ways; first of all, an incredible local market. We’ve got the only casino with 5 million people in the Greater Boston area. And then, when we branch out from there, we’ve got about 25 million people of gaming age within a 400-mile radius of the property, so probably the most incredible local market available with one casino. Massport has been excellent in terms of the international destinations coming in and out of Logan. And we’re now up to 54 non-stop international destinations coming into Logan, so the opportunities for picking up areas that are very good for Wynn with direct service to Hong Kong, Shanghai, Beijing and, of course, all the major capitals around the world provides us with a great opportunity for the international market. And so, we look at this on many different levels – local, regional, national, international – and feel we can qualify for all of them, so we’re very, very bullish on it.

What about room rates in that City of Boston, Bob?

Right now, extremely high and continuing to climb. There’s a real shortage of rooms. Of course, with healthcare, life sciences, biotech, the universities, there’s so much activity and so much building going on in the area and not enough quality hotel rooms. So the rates continue to climb and we’ll be at the top of the market. There’ll be nobody in the market that will have rooms even close to this. So we are actually predicting that we will do very high ADR in this particular property.

And we are the largest hotel in the metropolitan area in terms of total rooms – the biggest rooms in the East Coast, the largest room outside of Las Vegas in the United States of America in terms of footage and decor and the most amount of rooms in Central Massachusetts. 12 minutes from Logan airport. The first hotel we’ve ever had that had non-stop service from China. No Gulfstreams needed. I’m sorry [indiscernible].

I think the other part of my question was about the table game business in Las Vegas, which has been a little bit hard. If you have any sort of longer-term thoughts on it, it would be very helpful. Thank you.

Well, we do. And it’s what I led the conference call with. Gaming hasn't changed the price of gambling in 70 years, and yet our cost of operating these places has climbed steadily over that period. And the mentality of the marketing people and the gaming people to deal directly with that sector of the business has been trained, has been grown and matured with a focus on the top line – the average bet, the length of play, how often does the customer come, what is our chance of winning X dollars – and then let's get that customer, give him a room, pay for his airfare, send a limousine, give him a bottle of Lafite Rothschild, do anything, give him a shopping spree. These are the earmarks of the superficial thought that has guided casino management for decades when it should have been focused on what is the profitability of every table and every customer. Now, I’m not suggesting that they don't have profitability meetings and reviews at these various enterprises, but I’m in a position to say that any examination by any financial person in or out of the industry will reveal that the profit margins of table games in the gaming industry in the United States of America stinks, lousy, less than 20%. Now, these businesses end up with margins close to 30% because they have slot machines and rooms and bars and nightclubs. But the forgotten sector has been profitability of table games. We decided to take another look at that a year ago. I remember exactly, it was at the end of the second quarter and I went after it the first week of July and started moving furniture and changing rules in collaboration with my colleagues, like Maurice Wooden, who happens to be…

Appreciate it. Thank you.

And there are no further audio questions at this time.

Thank you, everybody, for paying attention today and giving us your time. Looking forward to sharing the results of all these exciting new projects as we go forward. Bye-bye.