The Star Entertainment Group (SGR), Australian casino operator, saw its fiscal H1 revenues decrease to half after reporting its lowest VIP gambling win rate in over a decade.
SGR reported on Thursday, gross revenue of AU$1.17b (US$786m) in the last half of f 2019, almost 12% lower than the same period in 2018. Earnings did far worse, falling 26.5% to AU$243m while net profit after tax dropped 48.5% to just AU$77m.
The results above are on a statutory basis, instead of the ‘normalized’ versions liked by Aussie gambling companies, which experience a constant 1.35% VIP win rate, irrespective of the reality. Under those conditions, revenue increased 2.4% to AU$1.3b, earnings grew 3.5% to AU$307m and profits rose 2.1% to AU$126m.
As reported by calvinayre.com, the clear difference in the two sets of figures came due to a sad 0.73% VIP win rate, almost a full point below the comparative period and the lowest rate for a half-year period since 2008. The prolonged run of bad luck spoiled a 2% rise in VIP revenue, an impressive achievement given the double-digit drops posted by most other Asia-Pacific casino operators over the same period.
On a statutory basis, the company’s onymous Sydney casino saw its revenue drop 4.3% to AU$768m while earnings grew 9.3% to AU$187m. VIP revenue fell almost 14% and domestic slots and tables were essentially flat. If non-gaming revenue not risen 7.1%, the overall situation would have been much worse.
SGR’s VIP distresses were evident at its two Queensland casinos, as revenue was up more than one-third while win rate sank to a truly awful 0.16%. Even worse, the earlier comparative period featured a massive 2.32% win.
Consequently, the Brisbane and Gold Coast casinos united for revenue of AU$408m, decreasing 23.3% year-on-year, while earnings were off by almost two-thirds to AU$57m.
Looking ahead, SGR says its Sydney casino’s extended Sovereign international VIP room will launch in May while the new Oasis premium space for domestic VIPs will follow in June. The enticing offerings are expected to give the venue a slim chance against rival Crown Resorts’ Crown Sydney project, which will begin its phased opening this December.
Building of the Queen’s Wharf Brisbane project stays on track with a targeted opening of late-2022. Meanwhile, SGR chairman John O’Neill said talks continue with the Queensland government for “regulatory certainty” concerning the company’s long-pursued Gold Coast exclusivity.
SGR informed its business in the year through February 16 had been “challenging,” due to “a continuing cautious consumer environment, bushfires and coronavirus.” VIP revenue is up, but the company admitted that it’s unsure what the future holds in terms of travel restrictions or how fast the market rebounds.