Australian casinos saw improvement in VIP volumes during the first quarter of the 2017-2018 financial year, Monique Rooney, analyst at financial services firm Morgan Stanley, has pointed out following discussions with local casino operators Crown Resorts and The Star Entertainment Group and the junket operators that are bringing high roller clientèle to their properties.
The improved volume was attributed to the recent release of Crown employees from Chinese prison. Last October, 19 Crown staffers were detained by Chinese police for illegally promoting gambling services across Mainland China. Casino gambling is prohibited in China, with Macau being the sole exception. Three of the detained individuals were released on bail shortly after their detention, and the other 16, including Crown’s Head of International High Roller Operations Jason O’Connor, remained under arrest awaiting to stand trial.
The 16 staff members went before court in June and were sentenced to nine to ten months in jail, including the time they have already spent in detention. The last six of the detained staffers were released in August.
As explained by Ms. Rooney in a client note made public by The Australian, junket operators have registered considerable VIP volumes improvement at Crown’s Melbourne and The Star’s Sydney gambling venues over the past several months since the beginning of the new financial year.
Crown’s profitability endured a severe blow in the weeks and months following the detention of its employees. VIP customers from China were the operator’s main market, particularly after the launch of an anti-graft campaign by Chinese President Xi Jinping which impacted Macau’s casino industry in an extremely negative manner and scared off players from the mainland to other casino jurisdictions in the region.
Australia’s VIP Casino Market in the Current Fiscal Year
According to Ms. Rooney the release of all Crown staffers from Chinese prison has rekindled interest in Australia as a casino gambling destination. The nation’s VIP market share was slashed to 3% from 6% in the months between the October 2016 detention of Crown employees and the end of the 2017 financial year on June 30, 2017.
However, the Morgan Stanley analyst explained that local casinos are set to “cycle the significant declines” from the second quarter of the current financial year onwards and that, combined with the improved VIP volumes, would only benefit the nation’s casino industry.
The recent positive comments about Australia’s VIP gambling market resulted in Morgan Stanley lifting expectations for the growth of said market during the 2018 financial year. The financial services firm now believes that Australia’s VIP casino sector could grow 9.4% in 2018. Morgan Stanley analysts previously forecast that the market would shrink 6% by the end of the current financial year.
The firm has also upgraded its forecasts for the two local casino operators, particularly for Crown, whose VIP business struggled the most following the detentions, and less so for The Star, which despite the challenging landscape, managed to grow revenue from Southeast Asian high roller players.
