Wynn Resorts founder Steve Wynn, shown at the August 2016 opening of Wynn Palace in Macau. (Photo credit: AP Photo/Vincent Yu)

Accusations of sexual misconduct against Steve Wynn last week led to an immediate 10% loss in the share price of Wynn Resorts, the company Wynn founded and still heads as chairman and CEO. Shares of Wynn Macau were hit harder Monday as Morgan Stanley Asia Pacific and Union Gaming in Macau downgraded the subsidiary operating Wynn’s two Macau properties delivering the bulk of company profits, while Sanford Bernstein maintained its Outperform rating after Wynn Macau reported a blowout fourth quarter. Shares have taken further beatings as regulators in Massachusetts, where Wynn is developing a resort outside Boston, and Macau investigate the allegations, along with Wynn’s board of directors, risking Steve Wynn’s corporate positions and gaming licenses.

Wynn told The Wall Street Journal, which reported on the allegations, that “The idea that I ever assaulted any woman is preposterous.”

But there’s a larger question that the allegations and their potential fallout ought to raise: Would Wynn Resorts be better off without Steve Wynn?

Wynn’s style

Wynn Resorts shares climbed from under $60 at the start of 2016 to above $180 while Wynn Macau shares rocketed below HK$8 to over HK$30 before the allegations surfaced. The August 2016 opening of Wynn Palace in Macau’s Cotai casino district has been a game changer for the company. Wynn Macau accounted for two-thirds of property Ebitda in 2017, and Union Gaming analyst John DeCree estimates that figure will top 75% this year.

Steve Wynn is an undisputed casino visionary. He upped the ante on attractions with the Mirage volcano while combining gaming with true luxury — and expecting customers to pay for it. Elegant indulgence remains his calling card.

With Wynn Palace, rather than follow government suggestions to move toward the mass market, Wynn built its usual high-end resort and caught the wave of a VIP-led recovery in Macau. Fourth quarter numbers suggest Wynn Palace made progress appealing to the more profitable mass market, but with MGM Cotai opening soon, new management at City of Dreams — both across the street — plus room-enlarging renovations at Las Vegas Sands-controlled Parisian, competition for extremely lucrative upper echelon mass customers is increasing. That threat may trigger Steve Wynn’s genius or expose him as a one-trick pony. DeCree, for one, calls Wynn “a substantial driver of the company’s success.”

The story of Stanley Ho

Losing the driver can send a company spinning out out of control. Stanley Ho dominated Macau gaming for 40 years through his tourism vehicle STDM and Hong Kong-listed SJM Holdings, until he was felled by illness in July 2009 at age 87.

Macau’s gambling tycoon Stanley Ho in April 2006. (Photo credit: FRANCISCO LEONG/AFP/Getty Images)

Ho didn’t believe foreigners could understand his customers. But when Sheldon Adelson’s Sands Macao opened in 2004, introducing the market to Las Vegas style — in contrast to Ho’s tired gaming floors where customer service was a rumor — Ho answered with Grand Lisboa, featuring offering a sophisticated casino and hotel experience for all, not just VIPs.

When Ho’s new rivals entered the junket business in 2006 and 2007 and raised commissions on VIP play — cash rebates to high rollers on large purchases of betting chips — from 0.7% to 1%, Ho complained about “cut-throat” competition. Then he was suspected of fueling a commission war that took rates to 1.35% at Crown Macau (now Altira), run by his son Lawrence Ho. Little over a year into the commission war, U.S. casinos cried uncle, agreeing to peace talks chaired by Stanley Ho.

Ho fell ill just a month after Melco Crown (now Melco Resorts and still headed by Lawrence Ho) opened City of Dreams as the second integrated resort in Cotai and began definitively shifting Macau’s center of gaming gravity.

We can’t know how Stanley Ho would have responded to Cotai, but SJM has consistently underwhelmed without him. The company has the worst site in Cotai, has been unable to reach a deal with Ho’s fourth wife and SJM managing director Angela Leong on developing an adjacent plot, and will open last in what’s now Macau’s undisputed casino capital. Since Ho’s exit, SJM has lost half its market share, falling from frontrunner to fourth in gaming revenue and a distant last in Ebitda.

Recognizing the baggage

Unlike Ho, however, Steve Wynn heads a 21st-century company that, as part of its obligation to shareholders, should have a proper succession plan in place, prepared to execute Steve Wynn’s vision without him.

Without him, Wynn companies may be able to value detractors such as the upcoming trials connected with the ex-wife he married twice, Elaine Wynn, and ousted Wynn vice chairman Kazuo Okada, whose expulsion likely doomed any chance of Japan casino participation for Wynn.

Like Stanley Ho, long accused of underworld ties, and Las Vegas Sands’ intercontinentally politically outspoken founder Adelson,  Steve Wynn at age 76 brings baggage along with brilliance. At some point the baggage outweighs the brilliance. Great leaders and their boards recognize that moment and act accordingly.