Fri, Feb 22, 9:14am by Staff Writer
Spending by wealthy foreign high-rollers has dipped across The Star’s casinos during the past six months.
The Australian casino giant has reported a 33 per cent drop in the six months to December 31, 2018 to $20.7 billion, with VIP turnover at its biggest casino in Sydney, down 49 per cent, according to The Sydney Morning Herald.
The house win rate was above average against Asian gamblers, mainly from China, in the half-year period, which helped drive the decline in turnover, The Star said on Thursday.
It explained that gamblers tended to play fewer hands and would tap out earlier when they lost their money faster.
Chief executive of The Star Entertainment Group Matt Bekier said there had also been a noticeable increase in “caution” exercised by wealthy foreign gamblers.
“The caution relates to uncertainly relating to the trade war between China and the US,” he said.
“They just don’t take as much risk as they might have 12 months ago.”
The Chinese economy recorded its slowest rate of growth in nearly three decades in 2018 after simmering trade tensions with America.
The Star’s rival casino company in Australia, Crown Resorts, this week also revealed that it had suffered a drop in spending by high-roller gamblers.
Crown’s executive chairman John Alexander also attributed this to China’s softening economy.
Gamblers operators across the globe have been gripped by growing uncertainty about how the fortunes of their lucrative high roller programs, where mainly Chinese punters playing baccarat can turn over thousands of dollars a hand.
Star Entertainment runs casinos in Sydney, Brisbane and the Gold Coast said that it believed the global VIP gambling market remained robust and a dip won’t be a cause for long-term concern.
$SGR #The Star Entertainment Group Morningstar | Mixed 1H for Star as Exceptional Domestic Gaming Growth was Offset by Weaker VIP: No-moat-rated Star Entertainment reported a mixed interim fiscal 2019 result, with net profit after tax, or NPAT, of AUD… https://t.co/yx6mCXcrFw pic.twitter.com/b6gUZOy1ZN
— ResearchPool (@ResearchPool) February 21, 2019
“Once the uncertainty settles down, I expect it to come back,” Mr Bekier said. “We are not pushing the panic button … we are executing our strategies.”
Star’s revenues fell short of Macquarie Research’s expected $135 million and JP Morgan’s forecasting of $129 million to net $124 million, a 2.4 per cent downfall after tax in the half year period.
Investors were however left impressed by a six per cent rise in earnings from The Star’s domestic gaming business at its flagship casino in Sydney, with share prices climbing 5.68 per cent to $4.65.
Crown told its investors on Wednesday that turnover from its VIP program had shrunk 12.2 per cent to $19.9 billion, driving down company profits over the final six months of 2018.
At Crown’s flagship casino in Melbourne, turnover was down 11.2 per cent to $17.3 billion.
The company’s after-tax profit had risen less than 1 per cent to $194.1 million, short of forecasts by Macquarie Research ($203 million) and JPMorgan ($221 million).
Macquarie’s senior gaming analyst David Fabris said: “overall, the result missed on softer-than-expected VIP within the Australian casinos.”
Foreign high-roller volume across all Australian casinos crashed in 2016-17 after the Chinese government embarked on an anti-gambling crackdown that arrested 19 Crown staff for illegal marketing activities on the Chinese mainland.
Crown’s chief financial officer, Ken Barton, remained circumspect stating that the softening was, “afflicting casinos across the Asia-Pacific region, including in Macau and Singapore. It is indicative of what we are seeing across the VIP market more broadly.”
SkyCity Entertainment Group is poised to tap into the lucrative online gaming space, with plans to launch a platform mid-year that will…
The proprietors of three suburban hotels in Lake Macquarie and Newcastle have applied to the state’s licensing authority to extend the hotels’…
The Hard Rock Hotel is expanding, according to Yahoo Finance. The Seminole Hard Rock Hotel and Casino in Florida is working on…