Star sees drop too
In an interim results announcement last week, Australian casino operator Crown Resorts said the arrests and ongoing detention of 14 of its employees in Mainland China will have no negative impact on the development of its planned $1.2 billion casino and residential development at Barangaroo in Sydney Harbor.
According to the Sydney Morning Herald, James Packer’s company also said its decision to “pause” its pursuit of Chinese high-rollers does not mean it has ceased doing business with China’s coveted VIPs. Crown reported a 9.6 percent drop in half-year net profit; the result showed what the Herald called “a collapse in VIP income,” down more than 47 percent in Melbourne and almost 39 percent in Perth.
The outcome and a planned “efficiency drive” could result in the loss of hundreds of jobs at Crown resorts in Perth and Melbourne.
Last week John Alexander—who was named Crown’s executive chairman following the resignation of Rowen Craigie—said there has been no update on 14 employees still jailed in a Shanghai detention center. The staff members including international VP Jason O’Connor were picked up in October and charged with gambling-related crimes.
“We already operate in other Southeast Asian markets; Mainland China only represents half of the VIP customer base and we are just paused, in one sense,” the new chairman said. “Once we have clarity about how to move forward we will.”
Alexander denied the half-year drop would affect the planning of Barangaroo or Crown Sydney, a six-star luxury casino and apartment complex targeting VIP gamblers and slated to open in 2021. “It would be wrong to see Barangaroo as solely as a VIP property,” Alexander said. “We believe it will be very attractive to the local VIP market, which is quite strong and growing.”
Back in October, news that up to 18 Crown staffers had been detained in China sent Crown’s share price tumbling. The company lost $1.3 billion in market capitalization as the stock dropped 14 percent in a day.
Julian Schimmel of law firm Maurice Blackburn is representing some disgruntled shareholders in a class action suit against Crown. He said there was a “compelling set of events suggesting that shareholders should have been told about the risks the Chinese environment posed to the company’s revenue streams.”
According to Bloomberg News, China’s ongoing crackdown on overseas casino operators has affected another Aussie casino operator. Star Entertainment Group Ltd. reported a 27 percent drop in its international VIP business since the Crown arrests.
Star, which operates Sydney’s only licensed casino, said the crisis has created “uncertainty” and “caution” and caused Star to look to Southeast Asia to generate more high-roller income. “We continue to assess the North Asian VIP business as the China situation develops,” Chief Executive Officer Matt Bekier said in a statement. “We are executing our strategy of diversifying our international revenues.”
Historically, 80 percent of Star’s VIP business comes from Hong Kong, Macau and mainland China, Bekier said on an investor call. “We’re being a lot more cautious,” Bekier said. “We’re not taking any risks.”
Several of the detainees were released last year; the Chinese government has yet to formally charge the others, reports Reuters.
