The Star claims it’s Australia’s biggest VIP gambling operator


the-star-casino-australia-vip-gamblingAustralian casino operator The Star Entertainment Group is celebrating its fiscal year results despite taking a beating from VIP gamblers on a hot streak.

On Thursday, The Star delivered its preliminary final report on its performance in the 12 months ending June 30, which saw revenue rise 6% year-on-year to a record AU$2.6b (US$1.9b), while earnings slipped 19.2% to AU$484.4m and net profit after tax (NPAT) tumbled 44% to AU$148.1m.

In addition to their statutory figures, Aussie gaming firms utilize a metric known as ‘normalized’ results, which assumes a constant VIP gambling win rate, on the assertion that this provides a more accurate picture of the situation. Applying this filter, The Star’s revenue was up 15.3%, earnings gained 14.3% and NPAT rose 20.3%.

The Star also noted that its statutory NPAT suffered from AU$37m in significant items, including debt restructuring and expenses related to the launch of its refurbished Gold Coast property.

As previewed in May, The Star’s Asian VIP gamblers – bundled under the heading of ‘international VIP rebate’ business – went on a prolonged hot streak in fiscal 2018. The year’s VIP win rate came in at 1.16%, well below the 1.59% in the previous fiscal year and the 1.35% average assumed under the ‘normalized’ heading.

On the plus side, VIP turnover was up 54.3% to AU$61.2b and statutory revenue rose 11.2% to AU$711.5m. The Star threw shade at its Aussie rival Crown Resorts by claiming that its VIP business was now the largest in Australia/New Zealand.

The company credited the VIP gains to “sales-driven diversification strategy” and “market normalization,” the latter referring to Chinese VIPs getting over their fears that Beijing wanted to mount their heads on pikes outside the Imperial Palace. Bad debts also hit a record low as a percentage of revenue.

The Star’s flagship property in Sydney claimed the bulk (AU$52.5b) of this VIP turnover. The property’s statutory revenue rose 3% to AU$1.74b but earnings dipped 28.7% to AU$410m due to higher operating costs and VIP win rate slipping nearly half a point to 1.07%. Domestic visitation was up 11.4% and non-gaming revenue spiked 15%.

Queensland operations reported revenue up nearly 13% to AU$843m while earnings were flat at AU$199m. The revamped Gold Coast property opened in fiscal Q3 with an expanded gaming floor and the new 57 all-suite hotel The Darling.

As for Queen’s Wharf, The Star’s AU$2.4b major integrated resort joint venture in Brisbane, the company says the project remains on schedule and on budget, with demolition works completed and foundation excavation work commenced.

Looking forward, The Star claims that FY19 has so far enjoyed “broad-based revenue growth” across all segments, while VIP turnover was said to be “pleasing.”