Picasso's 1943 work Le Marin, which was valued at $70 million (about £52 million), was withdrawn from last night's auction at Christie's in NY after what the auction house described as an accident on Friday.
This is the second time one of Wynn's Picasso paintings has been damaged. A restorer said the repaired painting was worth US$85 million, the suit noted.
Outside conservators have already been consulted to restore the piece. "After consultation with the consignor today, the painting has been withdrawn from Christie's May 15 sale to allow the restoration process to begin".
For "Le Marin", Christie's had assured the seller of a minimum price and found a third-party guarantor to bid for the piece at auction.
"Christie's has a very high standard of care for the objects entrusted to us and we have taken immediate measures to remedy the matter in partnership with our client".
Christie's added, "No further information is available at this time".
In 2006, Mr Wynn, who suffers from a disease that affects his peripheral vision, accidentally struck the artwork called Le Reve with his right elbow while showing it to friends in his Las Vegas office, leaving a small hole.
In January, Wynn was hit by accusations from dozens of people in The Wall Street Journal alleging decades of sexual misconduct. Christie's said it also pulled another of his paintings from the auction: Picasso's Femme au chat assise dans un fauteuil from 1964. He has since sold his stake in Wynn Resorts. No spokesman could immediately be reached for a comment from Wynn.