The half-year profits for Star Entertainment Group have dropped 76 per cent. This is due to the “abnormally low” house win rate in the group’s international VIP rebate business. Foreign VIP gamblers won very big at the group’s casinos. Read on.
On Friday, Star Entertainment Group, one of Australia’s biggest casino groups, announced its worst half-year profits since listing. The company saw its net profit drop 76 per cent. That is, the group profits slumped 76.8 per cent to $32.9 million for the six months from July to December 31. According to Star, the heavy decline was caused by the very low house wins at the group’s casinos as foreign high-rollers won big. However, Matt Bekkier, the company’s CEO, said the rate was part of the industry’s normal ups and downs.
“I am really, really happy with how this business is developing, how it’s bounced back in the North Asian business and how our diversification strategy continues to get traction,” said Bekkier.
The casino mogul said the company logged higher-than-usual house wins in several half-year periods; hence he is not intimidated by the current lower win rate. “We are running a casino: sometimes you win, sometimes you lose,” added Bekkier.
Although Star’s CEO remains ‘unfazed’ with the current profit drop. It comes as no secret that the group and its biggest rival, Crown resorts, have been waiting for recovery after the 2016 China mass jailing incident. The event led to a major decline in VIP revenue for both casino giants.
Since then, Star Entertainment’s VIP turnover has been reported to have jumped by nearly half to normal levels. Foreign VIP gamblers have won at a very higher rate compared to the usual. Owing to that fact, Star’s net profit was forced down to AU$32.9 million compared to consensus estimate of AU$89 million.