Crown Resorts sees high-roller turnover dive in ‘junket’ fallout
Crown Resorts has blamed a 34 per cent dive in high-roller turnover on weak market conditions and "negative publicity" stemming from revelations the casino giant it went into business with "junket" tour operators with links to organised crime.
The company, which is 36 per cent owned by James Packer, on Wednesday also said its casinos in Melbourne and Perth were being hit by the coronavirus outbreak due to restrictions on travel from China, but did not update the market on the full extent of the impact.
Crown’s gambling turnover fell 34 per cent to $13 billion, while group-wide normalised revenue was down 5 per cent to $1.4 billion.Credit:Daniel Pockett/Getty Images
Using "normalised" figures – which applies a long-term win rate to its gambling turnover, to strip out the impact of lucky or unlucky streaks by its high-stakes customers – Crown reported an 11 per cent fall in net profit after tax to $172 million in the six months to December 31.
VIP gambling turnover fell 34 per cent to $13 billion, while group-wide normalised revenue was down 5 per cent to $1.4 billion.
Crown's recently installed chief executive Ken Barton said in a statement that the result reflected "mixed trading conditions".
“VIP program play turnover at our Australian resorts was down… with the business impacted by a continuation of softer market conditions, exacerbated by recent negative publicity," he said.
The Sydney Morning Herald, The Age and 60 Minutes revealed in July that Crown went into business with “junket” operators linked to organised crime as part of its efforts to lure wealthy Chinese VIPs to its casinos.
On a statutory basis, including a more favourable than usual win rate in VIP gambling, Crown's net profit increased 25 per cent to $218 million.
Poker machine and main-floor gaming revenue was flat at $872 million, while non-gaming revenue, such as from hotel rooms and restaurants, was up 2 per cent to $408 million.
Mr Barton was promoted from chief financial officer to CEO three weeks ago, replacing long-standing Packer family lieutenant and executive chairman John Alexander, following a tumultuous 12 months for the company.
James Packer and former Crown chief executive John Alexander.Credit:Getty Images
Former Howard government minister Helen Coonan took on the role of chairman in the reshuffle, which Crown said was in response to feedback from proxy advisors and shareholders who were unhappy with Crown's unusual executive structure.
Hong Kong casino group Melco Resorts agreed to buy a 20 per cent stake in Crown from James Packer in May and signalled its intention to increase its ownership further.
But that deal fell over a fortnight ago, with Melco saying it would increase its investment beyond the 10 per cent it had already paid Mr Packer and would not seek board seats.
Meanwhile a powerful inquiry conducted by the NSW gambling regulator is preparing to examine in detail both Crown's involvement with junkets and whether the Melco deal breached Crown's Sydney casino licence.
Crown's licence for the new casino it is building at Barangaroo bans any involvement from Melco boss Lawrence Ho's father, Stanley, and associates because of his alleged links to organised crime.
Mr Barton said Crown was "cooperating fully" with the NSW and other inquiries underway into the group, and "look forward to working with regulators on any recommendations that may follow".
Crown declared an interim dividend of 30¢, flat on the same period last year.
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