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WHEN: Today, Thursday, June 20, 2019
WHERE: CNBC's "Squawk Box" – Live from Everett, Massachusetts
The following is the unofficial transcript of a FIRST ON CNBC interview with Wynn CEO Matthew Maddox and with CNBC's Contessa Brewer on CNBC's "Squawk Box" (M-F 6AM – 9AM) today, Thursday, June 20th – live from Everett, Massachusetts. The following is a link to video of the interview on CNBC.com: https://www.cnbc.com/video/2019/06/20/wynn-ceo-on-its-2point6-billion-massachusetts-casino.html.
All references must be sourced to CNBC.
JOE KERNEN: It's a busy morning from the market response to the Fed to Slack's public debut. But we are going to take a brief pause to bring you a rare interview with the CEO of Wynn Resorts. He's with Contessa Brewer in Everett, Massachusetts. Contessa.
CONTESSA BREWER: Hi there, Joe. Yeah, this weekend the Encore Boston Harbor opens. It's a $2.6 billion investment by Wynn Resorts. The biggest construction project, the biggest private construction project in Massachusetts' history. Now here's the thing, it's been a rough road to get here because, for one thing, a year and a half ago you had the CEO and founder Steve Wynn leave amid a serious #MeToo scandal. You had a board turnover. You have a new executive team. And then that big investigation and the grilling of the leadership team, including CEO Matt Maddox. The gaming license though, remains intact, which is the good news and led to this and the opening. Congratulations on the property.
MATTHEW MADDOX: Thank you. Good morning.
CONTESSA BREWER: It looks like, Matt, a year and a half ago when we sat down you had one vision of how the future of this company would roll out. And then things happened along the way that you did not anticipate. Looking back at this past year and a half, and all the upheaval, would you do anything differently?
MATTHEW MADDOX: No, I don't think so. We -- the one thing we did was reacted quickly. And what we have now is the controversies behind us. The transition is complete. And we have the best growth profile in the gaming industry.
CONTESSA BREWER: Tell me about Encore Boston Harbor. I mentioned the numbers of how much you've invested. When do you expect to get a return on that investment? And really, how does this fit into your portfolio? Because you're not a regional gaming company.
MATTHEW MADDOX: That's right. And Encore Boston Harbor is not a regional property. So, this is the very first integrated resort, large-scale integrated resort in a major metropolitan area in the United States. Boston is a tourist destination. And we're excited because our international customers are already talking about they want to come visit. They want to come to Boston. The amount of international credit that we already have booked for our play here is exceeding our expectations.
CONTESSA BREWER: So Harry Curtis at Nomura Instinet has anticipated 8% return on invested capital in year one. As much as 12% by year three. Do you think those numbers are on? Is that what you anticipate?
MATTHEW MADDOX: The properties always do take time to ramp up, just like Wynn Palace did when we opened in 2016. So, we do expect that. But I think that the return is going be strong.
CONTESSA BREWER: You bring up Macau. That's where you get the bulk of your revenues.
MATTHEW MADDOX: It is.
CONTESSA BREWER: VIP has been softening there. We're seeing kind of a change in trends. Tell me about Macau and how you plan to shore up revenue there?
MATTHEW MADDOX: Sure. So, in the third quarter of last year I was actually the first CEO in the business to say that there could be softening in the VIP segment. And we have seen that. However, it's stabilized over the last two quarters. And Wynn Palace and Wynn Macau are well positioned to capitalize on any market condition. In fact, we -- when I first became CEO we launched a renovation project for our downtown property that will be completed this year. That's a new renovation of the hotel. A brand-new casino, 10,000 square feet of retail and three new restaurants will be opening in six months.
CONTESSA BREWER: Have you seen a slowdown in business because of those renovations?
MATTHEW MADDOX: No, no, no. The VIP slowdown began because of the various issues in China, the slowdown in China, but we've -- revenues have been stable over the last couple of quarters.
CONTESSA BREWER: What about this U.S. trade deal hanging in the balance? What is the impact on the economy that might then affect who is coming to Macau to gamble and also just about the cultural pressure on Chinese customers that you might have?
MATTHEW MADDOX: So, again, there's a lot of speculation and we're watching it carefully. Our results over the last couple of quarters have been stable. So, the one thing that we've found is customers will slow down behavior when there's uncertainty in economies. But it always comes back. People love the business of fun, which is what we do.
CONTESSA BREWER: How important is a trade deal, in your mind, for the casino industry, for Wynn Resorts' bottom line?
MATTHEW MADDOX: I think a trade deal is important for the global economy. The two largest economies on the planet, the United States and China are co-dependent. And I believe in the end a deal will happen.
CONTESSA BREWER: Alright. We have heard a lot of talk from Sands and MGM about their plans for Japan, trying to win a license for an integrated resort. They've been specific on who they're working with, what city they want, how they are going to get there. We have heard very little from Wynn Resorts. What's your development plan?
MATTHEW MADDOX: So, we've been working on this for eight years. And we typically like to play a little more low-profile. What I love about our strategy in Japan is we are known as the high-quality operator. What we deliver is excellence.
CONTESSA BREWER: Do you already have a local partner?
MATTHEW MADDOX: We have a consortium that we're working with in various cities that we think will be one of the best competitors—
CONTESSA BREWER: And are you targeting a city, the way MGM is?
MATTHEW MADDOX: It -- we are looking at multiple cities. So, we're not just saying we're going only after one city. It's the same thing that happened in Massachusetts. No one targeted the Boston area because they thought it wouldn't happen. We did. And we won it.
CONTESSA BREWER: Matt, thank you so much for giving me this. Congratulations on the new property and good luck to you.
MATTHEW MADDOX: Thank you very much.
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