Our 2016 gambling review takes on the Asian gambling phenomenon, and its effect on Australia.
As we saw in 2016, Australian casinos have been performing pretty well. And according to the Australian Business Review, it’s all down to Asian tourists.
An influx of high rollers from China and elsewhere, or “short-term arrivals,” has led to a doubling of visitors from the region. Between 90 to 95 percent of VIP casino traffic in Australia is accounted for by Chinese gamblers according to the review published in September.
It didn’t take a physics expert to work out that the ‘equal and opposite forces’ have led to a gradual decline in Chinese VIP gambling.
The Chinese leader, Xi Jinping, has been leading a crackdown on corruption in China for several years now. As a result, the flow of illicit cash through Macau has been stemmed. The steady decline of gambling revenue in Macau only halted in the middle of 2016.
And while Macau continues on a journey towards mass-market appeal, at the behest of the Chinese mainland powers, Asian gamblers have been desperate to find new hunting grounds.
Barangaroo Caters to VIPs
In 2016, Sydney emerged as the battle ground for the new Asian gambling dollar. James Packer’s new Crown Sydney project finally got its green light. Despite plenty of opposition from the Greens and public groups unhappy about the blueprints, Barangaroo harbour will get its new casino in 2021.
Sydney’s newest casino will be aimed squarely at wealthy VIP gamblers travelling to Australia. Plans were released in 2016 to build a second hotel at the site. The $500 million hotel should house a fair amount of Macau overspill.
Star Makes Up For Monopoly Loss
Star Entertainment was still reeling from the decision to end their monopoly of casino gaming in Sydney. James Packer wasted no time in pushing ahead with plans for his own casino in the city. Star’s exclusive license runs out in 2019 but that looks like being at least two years before Crown will finish their own project.
Not ones for sulking in a corner, The Star carried on with a huge refurb of its casino site. And the revamp seemed to do the trick. Star Entertainment reported a net profit increase of 14.9 percent back in July. Although that fell some way short of analysts’ predictions, it was still healthy overall. Asian gambling in particular grew by seven percent.
And the group’s VIP unit reported $49.5 billion in revenue from its high roller packages. Asian and Chinese gamblers are the biggest group to take up these junkets.
As we head into 2017, next year should be another crunch year for Australian casinos. Crown is concentrating more on its homegrown projects as it jettisons stake in its Macau interests. The battle between Star and Crown is moving into Round 2.