Crown Domestic Growth Ravaged by Macau ASIA & OCEANIA
Crown Resorts home market growth has been torpedoed by falling profit margins from its investments in Macau. An Australian Tax Office bill for A$250m relating to Crown’s US joint-venture with Cannery Casino Resort is adding to the pain
Despite its domestic casinos seeing a 10 per cent increase in GGR, Crown Resorts saw its overall revenues slide 22 per cent due to the slump in Macau
SOUTH KOREA – Fitch Ratings has warned Mohegan Sun that it ‘will have difficulty achieving robust returns on investments’ on its Integrated Resort planned for Incheon Airport in South Korea ‘due to the restriction on gambling activities to foreigners only.’
It also warned that competition from new casinos in the Asia-Pacific region would be relentless. Fitch stated: “Foreigner-only large-scale integrated resort projects in South Korea will face competitive pressures from other Asia-Pacific jurisdictions such as Macau, Singapore, the Philippines and Australia. We believe this pressure will not abate as the first casino opened in Vladivostok, Russia in 2015, four new large-scale casinos are scheduled to open in Macau through 2017 and Japan continues to consider legalization.”
Despite a confining regulatory environment, some operators have illustrated keen expansion interest. Mohegan Tribal Gaming Authority (MTGA), KCC Corp. and Incheon International Airport Corp. (IIAC) were selected for a license to build the $1.6bn Inspire integrated resort (phase 1) at Incheon International Airport. The local Paradise Co. and Japan’s Sega Sammy have a joint venture (JV) project under way. Caesars and partner Lippo have not yet begun their JV project, and the timeline remains uncertain. Genting Singapore is also pursuing a $1.8bn project on Jeju Island. South Korea already has 17 casinos, but only one of them; Kangwon Land is allowed to open its doors to local players and with returns from Chinese plays down, the squeeze will feel tighter with new foreigner only casinos on the horizon.
Fitch said: “Gambling volume from Chinese players has been on the decline amid the corruption crackdown and slowing economy. The 16 existing foreigner-only properties saw aggregate casino revenue decline by 10 per cent in 2015. Still, the sole casino allowed to cater to locals (Kangwon Land) continues to see solid growth. Fitch believes chances that locals will be allowed to gamble elsewhere in the medium term are remote based on our conversations with the country’s officials and incumbent operators.”
Mohegan Sun’s Integrated Resorts will boast a 1,350 room hotel, a Paramount Studios-themed amusement park, and a 20,000 square meter casino with 250 gaming tables and 1,500 slots. Fitch hasn’t completely ruled out its success. “We believe the Incheon projects could be viable if the total number of projects moving forward remains modest and Japan’s effort to legalise casinos fails to materialise,” it said. “Incheon International Airport is one of the most heavily trafficked airports for international passengers in the world. By comparison, the Philippines has been able to develop a modest sized international gaming business despite its poor infrastructure.
P26 NEWSWIRE / INTERACTIVE /
247.COM AUSTRALIA CASINO OPERATIONS
Crown Resorts revenues dropped to A$205m in the six months to December with crown’s Macau casinos falling by 30 per cent whilst its Australian casinos rose 9.8 per cent.
Chief Executive Officer of Crown Resorts, Rowen Craigie, said: “Te 2016 first half results across Crown’s portfolio of businesses were varied. Main floor gaming revenue at our Australian resorts increased by 9.8 per cent which was a solid performance. VIP program play turnover in Australia of $35.7bn (down 3.8 per cent) was a reasonable outcome given the strong growth in the prior comparable period of 61.4 per cent and the depressed nature of the VIP program play market across Asia.”
Crown has a share of Melco Crown’s casinos in Macau, comprising Altira Macau, City of Dreams, Studio City and Mocha Clubs. Melco Crown’s profit of $37.2m was down $73.2m or 66.3 per cent on last year. After adjusting for an unfavourable variance from theoretical and pre- opening costs, Crown’s share of Melco Crown’s profit was $9.4m, down $75.9m or 89 per cent.
Mr. Craigie said: “While the medium to long-
term outlook for Macau remains positive, Macau continues to experience a challenging period which has adversely affected all casino operators. Overall gross gaming revenue across the Macau market in the half year to 31 December 2015 declined 31.1 per cent. However, Melco Crown has further expanded its market share in Macau and increased exposure to the more resilient and profitable mass market segments.”
In the Philippines, City of Dreams Manila continues to grow a more diversified revenue stream, with the continuing ramp up of the rolling chip business complementing its mass market gaming and non-gaming segments.
In Australia, normalised EBITDA from Crown Melbourne was $352.5m, up 0.4 per cent on last year. Te overall normalised operating margin decreased from 30.2 per cent to 29.3 per cent. Te decline in margin is due to the change in the mix of VIP program play in favour of junket play versus direct premium play and the additional costs associated with that change in mix. Normalised EBITDA from Crown Perth was $130.1m, up 2.4 per cent on last year.
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Asia
Adding to extensive distribution for its lotto-sized sports pools in Europe, Australia and most recently Africa, Colossus Bets has announced the launch of the first operator to go live offering ‘Colossus Football Lottery’ in Asia through its regional partner ONEWorks.
Headlined by the weekly $10,000,000 Colossus, a further series of ONEworks’ licensees will go-live in the coming months, following this week’s release of a flagship licensee, with the world’s
Bernard Marantelli, Chief Executive Officer of Colossus Bets, said: “On the back of prominent partners in Europe, Australia and Africa, adding the power base of ONEworks is an important milestone for Colossus Bets. ONEworks’ extensive list of Asian licensees will help drive growth into our pools and our momentum as a company.”
“Life changing jackpots on top-tier football with leg-by- leg cash-out is quickly becoming an essential component for any operator seeking to provide its players with the full suite of gaming products. ONEworks is Asia’s leading provider of sportsbook software services and the addition of our football jackpots to their platform will help cement ONEworks’ position as a one stop shop,” said Mr. Marantelli.
Australia
Favourit, an Australia-based socially-designed online gambling brand focusing on the global market, has announced the re-launch of its affiliate programme in partnership with Income Access, a technology and digital marketing company which specialises in the iGaming industry. Accompanying Favourit’s launch of a new online casino, the brand’s revamped affiliate programme will integrate Income Access’ affiliate management software and Ad Serving tool. First launched in 2012 and regulated by the UK Gambling Commission and Malta Gaming Authority for other international markets, Favourit offers players a wide range of betting options via a socially-designed user experience. Featuring live- betting functionality , the brand also provides players with social feeds and detailed insights on betting trends and sentiment to enhance their experience.
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