Australian firms struggling to compete with the Far East

TAGs: Asia, Australia, crown, Echo

Australian casinoAustralia’s gaming industry is set to slow this year as companies based in the country are faced with competition from firms overseas. It’s being reported that earnings in the gambling industry may grow by 2-3% in what is a slow prediction for the casino firms that currently populate the Australian gambling market.

Morningstar gaming industry analyst Ross MacMillan said, “Gambling is part of discretionary expenditure, so I’m anticipating that gambling expenditure will be down,” thus suggesting that the economic downturn was one reason for the companies to be losing money.

He added, “It’s going to be very subdued earnings growth if we see any at all.”

The companies in question are Tabcorp, Tatts, Crown and Echo all of whom are faced with different challenges when it comes to the casino business. Crown and Echo are both facing problems with competition and having to revamp their casinos so that they appeal to a wider demographic than before. They face strong threats from the gaming industry in Asia that is currently seeing unprecedented growth.

MacMillan added, “This is a real issue: whether it (capital expenditure) will continue in the future.”

Being able to fight off competition from the havens for VIP gamblers, such as Singapore, will be increasingly difficult for Crown and Echo. Crown must be glad they still have that stake in Melco Crown Entertainment!

Echo is in the doldrums though.

The firm is now out on its own following the demerger from Tabcorp and they’re likely to be far behind Crown Entertainment’s earnings. Fat Prophets gaming analyst Greg Fraser, explained that the Star City refurbishment that Echo carried out was aimed at non-gaming activities and should be judged on visitor numbers. He added, “In that sense, it’s the outlook statement for Echo this time that is perhaps more important than this year’s financial result.”

It’s not surprising that the Singapore based firms are becoming more successful as we have seen that Asia is where the gambling industry sees rapid growth


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