Victorian casino high roller ban would slash revenues
A significant chunk of Crown Resorts’ annual revenue could be wiped out in Melbourne if a state government probe recommends a ban on high roller gamblers.
The Australian Financial Review reports that if Victorian regulators apply the same philosophy as their West Australian counterparts, who announced a ban on high rollers, it would remove up to 20 per cent of revenue from the Melbourne operation.
Amid police concerns about money laundering linked to criminal figures, Western Australia’s Gaming and Wagering Commission said it would ban “premium and privileged” players, as well as junket operators, from Crown’s casino overlooking the Swan River.
Junket operators are agents used by casino companies to facilitate the travel, hospitality and extension of credit to big-spending gamblers.
The prospect of the WA regulator going beyond banning junket operators to include other high rollers lured directly by the James Packer-backed company was first revealed in late February.
WA’s expanded ban on foreign high rollers will deliver another hammer blow to the Perth casino, where Crown has invested heavily in special gaming floors and facilities for the lucrative gamblers.
Commissioner Patrici bergin’s casino inquiry in NSW found Crown had turned a blind eye to money laundering and had links to organised crime through its junkets and high roller programs.
As the storm was brewing during the inquiry in 2020, Crown declared it would only deal with junkets registered with the state gaming regulator, as did their rival, Star Entertainment Group, soon after.
The declarations have been a moot point during the pandemic, with international border closures stopping the travel of high rollers.
Fitch Ratings director Kelly Amato said the pandemic slump provided guidance on the likely effect of the ban on Perth, where VIPs contribute about 10 per cent of revenue.
“Before the pandemic, July through December 2019, the Crown Perth VIP program player revenue was $14.5 million, then it went down to $600,000 in the latest interim results to December 2020.
“So it’s effectively gone down to zero already, just because of the border closures,” she said.
Crown gets welcome boost from domestic markets
While the “ban will eat into profitability”, Ms Amato stressed Crown’s pre-tax earnings at the Perth casino actually went up 15 per cent last year as domestic patrons gambled more.
In her scathing assessment of Crown, Commissioner Bergin recommended that NSW ban junket operators, but stopped short of recommending a ban on all high rollers.
The regulator there has said it is considering the recommendations.
Victoria, meanwhile, has launched a royal commission into Crown’s suitability to hold a casino licence.
The move to slap a wider ban on Crown in Perth comes after the WA watchdog recommended its state conduct an inquiry into the suitability of Crown to run its Burswood casino following the Bergin report, which found Crown unsuitable to hold a casino licence in NSW.
Neither a ban on junkets nor high rollers was announced in Victoria, where hundreds of thousands of dollars were laundered and triad-linked junkets were hosted at Crown’s flagship casino.
If the Victorian regulator were to similarly ban all high rollers it could hit up to 20 per cent of revenue.
Ms Amato stressed that like Perth, high roller revenue is less profitable than the mass domestic market which is “very strong in Melbourne.”
This is because high rollers are costly to serve, with the casinos paying commissions and providing the gamblers, sometimes called whales, free accommodation and food.
“So even though it was in that range for revenue, in terms of its contribution to profit, that was always lower than what the revenue share was,” she said.
Crown Resorts said that it would comply with the WA ban on junkets and bar hosting “table games” with foreign high rollers it sponsors to play at the casino.