Impact of Crown arrests in China hurts Star Ent: CEO
Australian casino operator The Star Entertainment Group Ltd says “uncertainty” generated by the detention in mainland China of employees from market rival Crown Resorts Ltd is having a “significant impact” in its VIP business.
“We continue to assess the North Asian VIP business as the China situation develops,” Star Entertainment’s chief executive Matt Bekier said in a Thursday statement following the announcement of the firm’s results for the half year ended December 31. “We are executing against our strategy of diversifying our international revenues, including through South East Asian VIP and Asian premium mass.”
In October, several individuals linked to Crown Resorts were reportedly detained in mainland China, in a case said to be in connection with investigations into alleged illegal gaming-related marketing activities on the mainland. Several investment analysts stated in notes commenting on the case that the detentions were connected to marketing activities for the recruitment by Crown Resorts of high-value players in mainland China. The company has not commented on the work of the people detained.
The detentions have triggered “greater caution” in the market, Mr Bekier said on a Thursday conference call with investment analysts. “You see that because [from July to October] our [international VIP] revenue was only down by 4.2 percent but then in November and December we were down 27 percent on the previous correspondent period,” the executive stated
He added: “Clearly that has had some impact.”
Around 80 percent of Star Entertainment’s VIP business historically comes from players from Hong Kong, Macau and mainland China, according to the company. “We’re just being a lot more cautious” about which high rollers the company does business with, Mr Bekier said on Thursday. “We’re not taking any risks.”
Company chairman John O’Neill had stated in October that Star Entertainment complied with rules in mainland China regarding the promotion there of gaming activities in other places. The executive assured shareholders at the time that Star Entertainment worked “within parameters as determined by the Chinese authorities, in the same way we comply with rules and regulations in every other market in which we operate.”
Star Entertainment announced on Thursday net profit after tax of AUD141.8 million (US$109.4 million) for the six months to December 31, up by 135.2 percent in year-on-year terms. Group revenue was AUD1.23 billion, up 11.1 percent from the prior-year period.
In October, Star Entertainment was formally granted a casino licence for Queen’s Wharf Brisbane, in Queensland’s state capital, Australia. The firm owns and operates The Star Sydney casino hotel (pictured) in Sydney, as well as the Jupiters Gold Coast and the Treasury casino in Brisbane.
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