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Casino tycoon Steve Wynn is nothing if not a showman.

The SW Steakhouse, a signature restaurant at his new 1,700-room, gambling resort in Macau, features a 25-foot video screen. As diners dig into their rib eyes, King Kong peeks from behind a window and a giant gorilla hand reaches out to grab a banana.

The Wynn Resorts Ltd. chief executive officer is also a storied risk-taker. His new property, the Wynn Palace, is his most expensive casino yet—a $4.2 billion wager that the former Portuguese enclave will shake off a two-year slump that’s driven down betting revenue by 36 percent and re-emerge as a first-tier vacation spot for gamblers all over Asia.

“If you’re in Bangkok, or Tokyo, or Seoul, the idea was that Macau will become, for the entire Pacific region, the destination resort city,” said Wynn, 74, during a wide-ranging interview ahead of his resort’s opening on August 22.

That’s the vision. The reality is that Macau remains heavily dependent on mainland Chinese gamblers. The city is also in the midst of a surge in new casino construction that promises to ratchet up the competition. Sheldon Adelson’s Las Vegas Sands Corp. will open its $2.9 billion Parisian Macau on September 13. MGM Resorts International follows next year with the $3.1 billion MGM Cotai.

Fewer Tables

 The Wynn Palace features a $100 million water fountain show synchronized to music and lights.

Photographer: Calvin Sit/Bloomberg

None of this is news to Wynn, who remains an unrepentant optimist about Macau’s long-term prospects. Turns out the local government is a bit more cautious than he is.

Macau’s government authorized 150 new gaming tables for Wynn Palace, fewer than the company wanted as the Chinese city signals it’s serious about limiting gambling growth. The gaming regulator is also allowing 250 tables to be transferred to the new project from Wynn Macau, leaving the older casino resort with 270 tables as competition for visitors heats up in the world’s largest gambling hub.

Ever the salesman, Wynn put the best possible face on the diminished number of gambling positions. “It’s much better to under-spread in games than over-spread,” he said. “No one wants to see a bunch of idle tables.”

The increasing number of properties already has casino operators offering cut-rate packages with rooms, ferry tickets to the Macau Peninsula and entertainment to lure visitors, said Grant Govertsen, an analyst at Union Gaming Group LLC in Macau. “I suspect we’re going to see increasing discounts as the new supply comes online,” he said.

A similar dynamic unfolded in Las Vegas after the 2008 financial crisis, when Wynn Resorts, Sands and MGM all opened new resorts on the Strip. Rooms at even higher-end resorts like the MGM Grand fell to $69 a night. Earnings at the casinos plummeted and in many cases still haven’t fully recovered.

For the moment, Wynn Palace rooms are about $300 a night on a week night. Meanwhile, Melco Crown Entertainment Ltd.’s Studio City is offering packages including room, ferry tickets to Macau and spins on its two theme-park rides for about $130 per person.

Family Attractions

The big test will be whether the new properties can attract new customers. So far that hasn’t been the case. Two mega-resorts opened last year in Macau, the $2.5 billion second phase of Galaxy Entertainment Group Ltd.’s Galaxy Macau and the $3.2 billion Studio City, which features a Batman ride in its lobby and a figure-eight shaped Ferris wheel in its side. Visitors to Macau fell 2.6 percent to 30.7 million in 2015 and were unchanged in the first half of this year.

Rival casino resort Studio City, developed by Melco Crown Entertainment, built the Golden Reel ferris wheel to appeal to families.

Photographer: Justin Chin/Bloomberg

“We don’t see industry earnings taking a major leg down, but at the same time, we don’t see a V-shape recovery as well,” said Richard Huang, an analyst with Nomura International in Hong Kong. Investors who have driven shares of Wynn Resorts up 47 percent and Las Vegas Sands up 19 percent this year in hope of a recovery may be disappointed.

“Expectations have risen to a pretty stretched level, especially for Wynn Palace, so has the share price which left these stocks with limited scope for execution errors or potential demand disappointment,” Huang said.

The only place in China where casino gambling is legal, Macau has been a phenomenon since the government began allowing foreign casino investment in 2002. Gambling revenue surged sixteen-times to a 2013 peak of $45 billion. The following year, Chinese President Xi Jinping began cracking down on corruption on the mainland. The Chinese economy slowed. Trips by high-rollers, some of whom brought $5 million or more with them, collapsed.

“I would think that’s going to be a tough segment for the foreseeable future,” Sands’ Chief Operating Officer Rob Goldstein said on a conference call.

Operators such as Wynn, Sands and MGM are looking to woo a customer they call the premium mass market, those who bet as much as $300,000 a day, according to MGM Chief Executive Officer James Murren. Meanwhile, Melco Crown is chasing recreational gamblers and tourists. The company said 90 percent of its floor area in Studio City is dedicated to non-gaming facilities.

The Macau government has pushed local investors to design properties with a more mass market appeal. “For it to become the premier place, it can’t just be gambling. It has to take a page out of the Vegas playbook,” said Union Gaming analyst Govertsen. “They have to find some things that people really love to make it the entertainment capital of Asia.”

Wynn, for his part, said his new resort isn’t a theme park. “This is an adult resort. It is offering food, beverage and gaming,” he said. “There are better places for kids than Macau and Las Vegas.” Also, the real money to be made is at the tables, given that gambling is 80 percent of the profits of most Macau operators, according to MGM’s Murren.

Dutch Windmill

Wynn certainly has big plans to wow the adults. Private suites for high rollers will feature personal spa and massage rooms, dining areas and a bar. Villas come with private pools that have fountains and gardens. The Wing Lei Bar has crystal chandelier hanging from its ceiling and mirrors and precious stones on its walls. Floral sculptures, in the form of a carousel, a Faberge egg and a Dutch windmill, will move as guests stroll by. A spa features $450 facial treatments with gold-leaf masks and crushed diamonds.

The Wing Lei Bar at Wynn Palace.

Source: Wynn Palace

“When you walk into the building, there’s an emotional moment,” Wynn said, adding that he and his colleagues had reviewed “every inch” of the property. Wynn said he has sat in every chair and sofa model that the resort offers. He personally slept on five mattresses and had one especially made for the rooms. Wynn even worked on the design of remote controls in the guest rooms. “I have to walk the walk before the opening.”

A new light rail line, still under construction, will drop guests near a lake in front of the hotel. Wynn is putting air-conditioned gondolas there to whisk visitors across the lake, where they will watch an $100 million show with fountains synchronized to music.

“We spent over $4 billion on this remarkable building,” Wynn said in the interview. “It’s time to bring life into it.”

—With assistance from Daryl Loo.