Effect of devalued Chinese currency felt in Las Vegas

What happens in China doesn't stay in China.

And Las Vegas gaming operators and the city's tourism industry are going to feel the effects of the recent depreciation of the Chinese currency.

Wynn Resorts Ltd., Las Vegas Sands Corp., and MGM Resorts International to a smaller extent are driven by their businesses in Macau, China, said University of Nevada, Las Vegas economics professor Stephen Brown. Macau is China's only legal gambling hub, with earnings peaking at $45.2 billion in 2013. Nevada casinos recorded $11.1 billion that same year.

In January 2014, the Wall Street Journal estimated Macau casinos bring in profits seven times greater than their American counterparts.

The depreciation, coupled with China's anti-corruption laws, has dealt a hard blow to the gaming industry in Macau, Brown said.

On Aug. 10, China first devalued the yuan, then adjusted the currency again. On Thursday, the yuan was trading at 6.9 for every United States dollar.

"The anti-corruption reduced Macau gambling and now Macau gambling is going to be worth even less to the casino companies based here in the United States (because of the devaluation)," Brown said.

Wynn Resorts, owner of Wynn Macau and Encore at Wynn Macau, has 70 percent revenue exposure to China, meaning it is the most China-dependent of any American gaming corporation, according to website 24/7 Wall St.

Wynn Resorts officials declined comment for this story.

The depreciation will also affect Las Vegas on the tourism front.

According to the Las Vegas Convention and Visitors Authority, 3 percent of the city's visitors last year were from China, and they will immediately feel the impact.

"(The depreciation) makes vacationing in Las Vegas more expensive for Chinese tourists," Brown said. "These effects will be felt fairly quickly."

In 2014, Las Vegas had 188,719 Chinese visitors. This was a sharp decrease from 201,577 the year before. Brown predicts 2015 will see even fewer numbers.

The amount of revenue this group brings in is unclear, but Brown said it is bound to decrease.

"Everything that (Chinese tourists) buy when they're here is more expensive in terms of their currency," Brown said.

Robert Young, chairman of the Las Vegas Asian Chamber of Commerce, said the depreciation will not affect Chinese locals, but some abroad will have to change their plans.

"I think whoever wants to come and visit is canceling their trip," he said.

Contact May Ortega at mortega@reviewjournal.com or 702-387-2908. Find @MayVOrtega on Twitter.