China's Casino Crackdown Infects Sydneyby
High-roller turnover in November, December fell 27%, Star says
China detained 18 Crown Resorts workers on mainland in October
China’s clampdown on overseas casino operators is being felt in Sydney as Star Entertainment Group Ltd. reported a slump in its international high-rollers business after the detention of employees at rival Crown Resorts Ltd.
Turnover from international VIP clients slumped 27 percent in November and December, the company said in a statement Thursday. Star, which operates Sydney’s only licensed casino, said the October detentions on the mainland have created “uncertainty” and “caution” and it’s looking to Southeast Asia to generate more high-roller income to reduce it’s reliance on China.
“We continue to assess the North Asian VIP business as the China situation develops,” Chief Executive Officer Matt Bekier said in the statement. “We are executing our strategy of diversifying our international revenues.”
Star fell 0.2 percent to A$5.01 at 11:11 a.m. in Sydney, valuing the company at A$4.1 billion.
The detention of 18 Crown workers triggered concern of a renewed crackdown on casinos that woo Chinese citizens to gamble overseas. Melbourne-based Crown, controlled by billionaire James Packer, said in December that turnover from its high-wagering, top-priority customers at its Australian resorts slumped 45 percent from a year earlier in the most recent 23-week period.
Star’s earnings from the VIP business were also hurt from the sales and marketing costs tied to the diversification, it said Thursday. Net income after tax in the six months ended Dec. 31 more than doubled to A$141.8 million ($109 million), partly because a higher win rate against VIP gamblers.
Historically, 80 percent of Star’s VIP business comes from Hong Kong, Macau and mainland China, Bekier said on a call with investors. “We’re being a lot more cautious’’ about which high-rolling clients Star picks, he said. “We’re not taking any risks.”