Australian casino operator Crown Resorts had a “subdued” fiscal 2019, which is apparently Aussie slang for ‘lousy.’
On Wednesday, Crown released its full-year performance for the 12 months ending June 30, during which ‘normalized’ earnings fell 8.7% to AU$802.1m and net profit after tax fell 4.7% to AU$368.6m (US$249.9m).
‘Normalizing’ results is an Australian phenomenon in which the casino operator pretends that its VIP winning percentage is a constant 1.35% (along with discounting the impact of one-off items). In Crown’s case, its VIP win was actually higher at its two Aussie venues in FY19 – significantly higher (1.58%) at Crown Perth – creating a combined positive earnings impact of AU$48.3m.
Crown Melbourne’s ‘normalized’ revenue was down 5.4% to AU$2.15b, as main floor gaming revenue improved 1.5% to AU$1.23b while VIP revenue fell by more than one-quarter to AU$441.4m. Non-gaming revenue was up nearly 2% to AU$479m.
Crown Perth’s normalized revenue was down 5.3% to AU$799.4m while earnings fell 10.8% to AU$221.8m. Main floor revenue was down 2.1% to AU$454.2m while VIP revenue slid 30% to just AU$72m.
In the UK, the Crown Aspinalls casino business reported earnings cut nearly in half to just AU$6.4m, thanks to “difficult trading conditions across the London high-end casino market.” Making matters worse, Aspinalls’ VIP win percentage was a lousy 1.04%.
The Crown Digital division is a lot smaller since the company sold its CrownBet stake, with just the Betfair Australasia betting exchange and DGN social gaming business now under the Digital banner. Digital revenue fell 55.6% as a result, but expenses fell even further (61%), leaving earnings down a more tolerable 2.7% to AU$26.1m.
Overall VIP turnover at Crown’s Aussie resorts was down 26% in FY19, quite a turnaround from FY18’s 54.5% rise in VIP turnover. Crown’s executive chairman John Alexander was left musing about “subdued market conditions” and the general suckiness of the Perth casino’s table games business.
Crown’s VIP business may take a while to recover, in part due to the Suncity Group‘s recent announcement that it was closing its Australian casino VIP rooms. The junket operator has since claimed it intends to “maintain a very close relationship” with its Australian partners, although the company failed to offer specifics on how often it would be texting ‘U up’ to Crown’s phone.
Alexander had much stronger words for the seemingly endless parade of bad news about Crown in the Aussie media. Said parade began with last month’s airing of the controversial 60 Minutes episode alleging sketchy behavior in Crown’s VIP business – some of it linked to Suncity – and has led to multiple regulatory probes at both the federal and state levels.
On Wednesday, a defiant Alexander echoed views Crown has already publicly stated, saying the probes were the result of the “sensationalist nature of the allegations” made in reports that “unfairly sought to tarnish Crown’s reputation.” Alexander insisted that Crown had “zero tolerance for criminal elements” and would continue to cooperate with the regulatory prostate exams.
Crown did get a small piece of good news this week, as the company reached a confidential settlement with the New South Wales government that will preserve the harbor sightlines of its in-development Crown Sydney venue, which is scheduled for completion in the first half of 2021.
