Crown Resorts Limited (ASX: CWN) shares traded flat today after it provided a brief trading update at its Melbourne AGM.
In Australia for the period 1 July to 20 October 2019 revenue from main floor gaming (ex VIP) was up 2%, while main floor non-gaming revenue was flat on the prior corresponding period.
However, the big problem is the 46% drop in VIP or ‘whale gambler’ turnover at its Australian resorts.
The high rollers have disappeared from Crown’s casinos on the back of a serious clampdown by the Chinese government on the promotion of Australian gambling junkets.
In June 2017 up to 19 China-based Crown employees ‘pleaded guilty’ to illegally promoting gambling in China, with fines and serious jail terms handed out.
Unsurprisingly, Chinese high rolling gamblers are not visiting Crown’s Melbourne casino in as greater numbers anymore.
Crown has also faced Nine Entertainment media allegations that its casinos attract all sorts of morally dubious visitors and are targets for money launderers.
Today, Crown’s chairman John Alexander attacked the “quality of the journalism” covering Crown. Mr Alexander labelled it “sensationalist” and like nothing he’d seen in 50 years.
However, it looks like the disappearing whales may be Crown’s own fault.
The river card for investors remains Crown Sydney that is still expected to open over the first half of 2021.
Crown’s $2 billion bet on the hedonism centre could prove an irresistible draw for overseas whales and Sydneysiders. It will also provide stiff competition to Star Entertainment Group Ltd (ASX: SGR).
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The Motley Fool Australia owns shares of and has recommended Crown Resorts Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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