Despite a number of missteps last year, Crown Resorts, the largest casino operator in Australia, managed to see an increase in profits. According to a filing with the Australian Stock Exchange, the casino company indicated that its annual profit had increased by 12.7%. The news pleased shareholders and the company’s stock price jumped to a three-year high.
At the end of the fiscal year on June 30, the company net profit was $287.4 million. This was a substantial increase over the $253.12 million reported in the prior period, and was a direct result of an increase in VIP gambling. That segment increased by 54.5% over the course of the year. John Alexander, the company’s executive chairman, explained, “VIP program play turnover in Australia of $51.5 billion was a pleasing outcome.”
The profit news is welcome, given the decision by the company’s owner, James Packer, to step down from the board in March. Packer, who owns 47% of Crown, unexpectedly resigned over “mental health” concerns.
Several whistleblowers had come forward during the year to admit that the company was engaged in machine-fixing activities at its Melbourne casino. Specifically, the casino removed certain buttons on slot machines that resulted in a reduction in the odds of players winning.
The company also suffered during the year after it walked away from a joint venture planned for Macau. It had previously cancelled overseas plans in 2016 when 17 Crown employees were arrested for marketing gambling tours in China.
Crown’s interim reporting this year indicated a possible return of Chinese high-rollers. They had previously stopped visiting overseas casinos due to a campaign by China’s government to try and curb displays of wealth among public officials.
By the middle of the year, shares in Crown had nudged upward 5.4%. It was the highest intraday increase since 2015 and an improvement on the level seen prior to the employee arrests in China.
In a note by analysts with Morgan Stanley, the company stated, “VIP was the highlight, well exceeding our expectations.”
Despite concerns over its responsible gaming policies, and the issues it has dealt with this past year, Crown recently saw its gaming license renewed by the Victorian Commission for Gambling and Liquor Regulation (VCGLR). The VCGLR indicated that the company needed to improve a number of internal policies and procedures, but that none of the infractions warranted denial of the renewal.