Australia’s top casinos have been witnessing a decline in the number of Asian high-rollers over the past one year. The indexes pointing at dampened economic growth in China are to blame for decreasing revenues for top Australian Casinos.
However, as the Dragon’s economy continues to underperform amidst the Sino-American trade war, a report suggesting that the economy may recover in the coming financial year has brought a sigh of relief to Australian casino operators.
The Chinese economy has registered it’s lowest growth rates in the last 30 years, since the economy was opened up. However, the impact of the struggling Chinese economy has been felt by Australian casino operators like Star Entertainment and the James Packer-backed Crown Resorts who have witnessed a steep fall in the number of Asian high-rollers visiting their facilities. As such, it has taken a toll on its revenues.
Analysts have been closely following the Macau markets as this Chinese territory is considered as “mecca of gambling” and most of the Chinese gamblers visit Macau as gambling is prohibited in mainland China.
Analysts from a firm called Macquarie Wealth Management have been studying the trends and the markets in Macau and have indicated that the tides might turn in favor of Casino operators as they see a change in high-roller sentiments which they “ see flowing into VIP confidence and driving an uptick in volumes.”
The analysts have said that: “We now include a VIP recovery in the financial year 2020. While we remain cautious on [second-half 2019] VIP volumes, with our view that Macau VIP bottoms in the June 2019 quarter, we are optimistic and now forecast a recovery.”
The revenues from VIP rollers shrunk last year for the top Australian casinos. Crown Australia had posted earlier this year that their VIP revenues have shrunk 12.2 percent to $19.9 billion and has significantly impacted their overall profits for the year ending December 2018.
The Star Casinos fared the worse as it’s revenues from high-rollers declined 33 percent to $20.7 billion in the second half of the financial year ending December 2018.
Analysts said that “The domestic business still accounts for more than 80 percent of EBITDA (earnings before interest, tax, depreciation, and amortization) and is a higher quality business than VIP having greater earnings visibility and better margins.”