GGRAsia – Crown VIP turnover dips 26pct in year to June 30

Crown VIP turnover dips 26pct in year to June 30

Aug 21, 2019 Newsdesk Latest News, Top of the deck, World

Australian casino operator Crown Resorts Ltd saw its financial year to June 30 profit dive 28.1 percent, a result that was announced shortly after the group’s Chinese-player focused high-roller business was roiled by controversy for the second time in three years.

Such profit was AUD401.8 million (US$272.5 million), compared to AUD558.9 million in the prior year.

At Crown Melbourne (pictured) in Victoria, the casino firm’s current flagship venue, the reported VIP revenue was down 19.6 percent year-on-year at AUD453.7 million for the 12 months to June 30. At Crown Perth, in Western Australia, VIP revenue slipped 16.2 percent to AUD84.4 million. At Crown Aspinalls in London, in the United Kingdom, VIP revenue dropped 26.1 percent, to AUD55.2 million.

In normalised terms – adjusted to exclude the impact of any variance from theoretical win rate on VIP programme play and other significant items – VIP play turnover – another measure of high-end gambling performance – for the 12 months to June 30 was AUD38.0 billion, down 26.1 percent from the prior year, said Crown Resorts.

Main floor gaming revenue increased by 0.5 percent, with modest revenue growth in Melbourne offset by continued softness in Perth, particularly for the table games business, said the casino operator.

The firm nonetheless announced on Wednesday a AUD0.30 dividend on its fully-paid ordinary shares for the period. Payment is due on October 4.

“VIP weakness was the key driver behind the soft result,” wrote Donald Carducci, an analyst at JP Morgan Securities Australia Ltd.

“This decline was primarily due to the reduction in VIP programme play revenue in Australia, which was down 26.1 percent,” he added.

Australia media allegations that Crown Resorts’ largely junket-supplied VIP gambling business – mostly based at Crown Melbourne – had been used as a conduit for money laundering by criminals, were made public only in late July, outside the firm’s current financial reporting period. The firm has denied the claims.

“Crown’s Australian operations’ full-year result reflected subdued market conditions,” said executive chairman John Alexander, in prepared remarks filed to the Australian Securities Exchange on Wednesday.

‘Zero tolerance’

“It comes as no surprise that various regulators and other agencies have launched inquiries given recent media reports and the sensationalist nature of the allegations raised,” said Crown Resorts’ Mr Alexander in his prepared comments.

He added: “Crown has zero tolerance for criminal elements and we view these inquiries as an opportunity to continue our cooperation with regulators and other agencies.”

Ken Barton, Crown Resorts’ chief financial officer, noted on a conference call with analysts after the financial-year 2019 results were announced, that the group’s high-end gaming business had moved from “premium direct” – i.e., house-managed operations – to “predominantly junket” a “few years ago”.

“We have significantly reduced our sales team outside of a couple of head office areas,” noted the CFO.

In October 2016 Crown Resorts had been rocked when Jason O’Connor – in the role of executive vice president of VIP international – was among a group of Crown Resorts workers detained in mainland China and later formally arrested, on allegations of “gambling crimes”.

Direct marketing of casino gambling services within the boundaries of mainland China is illegal.

In June 2017 Mr O’Connor and others were handed jail sentences by a Shanghai court, although time previously spent in detention was credited towards their eventual release date.

On Friday it emerged that Macau junket investor Suncity Group – which was mentioned in the media reports on Crown Resorts’ more recent VIP business – was closing its VIP rooms at Crown Melbourne, citing commercial considerations.

It was subsequently reported that Alvin Chau Cheok Wa – the boss of the privately-held Suncity Group – was claiming via Australian lawyers that he had been defamed by a number of media allegations, including a report in The Age newspaper that cited unnamed sources in Australia suggesting he had been banned from travelling to that country.