Crown Resorts VIP revenue cut in half following China legal woes


crown-resorts-vip-gambling-declineAustralian casino operator Crown Resorts saw its VIP gambling activity cut nearly in half in its most recent fiscal year following the company’s legal dustup in China.

On Friday, Crown released a report card detailing its performance over the 12 months to June 30, during which ‘normalized’ net profit after tax – so named because it attempts to smooth out the variance associated with VIP gambling – fell 15.5% to A$343m (US $272.6m).

Actual non-normalized profit nearly doubled to A$1.87b, although A$1.55b of this came via Crown’s dumping of its stake in the Melco Crown Entertainment joint venture (now operating as Melco Resorts & Entertainment) as part of Crown’s decision to restructure and refocus on its domestic resorts.

Speaking of, revenue at Crown’s domestic resorts fell 12.7% to A$2.8b, primarily due to VIP gambling revenue falling 49% year-on-year. By comparison, main floor gaming revenue was down only 1.4% to A$1.65b while non-gaming revenue gained 6.5% to A$718.5m. Domestic earnings were down 12.8% to A$828m.

The VIP plunge came following the arrests in China last October of 19 Crown employees, including head of international VIP services Jason O’Connor, for promoting illegal gambling activity on the mainland. Ten staffers were released last month, but not O’Connor, who was handed a 10-month prison sentence in June.

Crown Melbourne reported VIP revenue falling 49.7%, while Crown Perth saw its VIP revenue slide 46.1%. Main floor revenue was flat in Melbourne and down 4.7% in Perth.

Crown Digital – which includes the CrownBet and Betfair Australasia online sports betting operations and the DGN Games social gaming division – reported earnings of A$14.8m, a significant turnaround from the A$5.4m loss in the previous fiscal year. Digital revenue jumped nearly one-third to A$303m.

The Crown Aspinalls operation in the UK reported an earnings loss of A$5.5m after its VIP tables played unlucky, resulting in a negative impact of A$32m.

Crown executive chairman John Alexander made an early run at understatement of the year by noting that the results “reflected difficult trading conditions.”