Crown Ltd, a significant player in the casino industry in Australia and Asia, is pausing its efforts to draw Chinese VIP players to its Australian casinos. This comes as a result of the recent crackdowns that have led to the arrest of the firm’s workers in Beijing. Recent corruption investigations and gambling-related convictions have put Crown Resort Ltd.’s operations in China under scrutiny. Furthermore, President Xi Jinping’s anti-corruption campaign against party leaders has reduced VIP business in China.
These crackdowns are not directed at one player but rather the entire gambling industry. As a result, eighteen workers were arrested. One person was acquitted while the majority face criminal charges, raising concerns that high-spending individuals will curtail overseas travel.
Heavy Revenue Decline
Since the beginning of the crackdown, the VIP industry has suffered a steady decline in revenue. Crown has, as a result, decided to cease all commercial operations in the region. Executive chairman John Alexander says they wanted to observe how things went with the authorities before making any judgments on the marketing approach in the area. Revenue in the company’s home-based casinos has decreased by six percent in the fiscal first half of the year, while VIP play fell by 45 percent.
Due to fewer tourists, many of the region’s casinos have seen their income decline. The firms have grown more cautious about giving VIPs credit. Before the recent developments, Crown was building a casino on Sydney’s waterfront. It intended the new project to be a complex business that would include complimentary food and drinks, Chinese-speaking employees, and flights on a private plane. The primary purpose would be to persuade Chinese consumers who could only spend within China. The government’s crackdowns on the corporation, as a result, have proven to be a major setback for the organization.
In China, casino firms are banned from offering their betting services directly to Chinese consumers since gambling is illegal on the mainland. They are only allowed to promote various destinations in general rather than specific ones.
Crown’s Quality Still Undoubted
According to Ken Barton, the company’s chief financial officer, despite the turmoil, numerous clients are willing to recognize the company’s quality and assets and have gone on to do business with them in countries other than China. Despite its recent growth, the corporation now faces stiffer competition from other casino players in the region than ever before.
Mr. Alexander points out in his remarks that countries such as Japan have recently prepared the way for the legalization of gambling facilities. Multiple international casino providers have stated that they are motivated to invest billions of dollars in expanding their operations and constructing new ones. As a result, Crown Resorts Ltd has been under increasing strain.
Shift of Focus
The company has decided to refocus its efforts on its assets located in Australia. Following the crackdown in China, the goal has been to entice Chinese guests to visit its Australian casinos. It has announced that it will be selling its investment in Melco Crown Entertainment Ltd., based in Macau. Rowen Craigie, the company’s CEO, has also stepped down. Mr. Alexander has taken over his duties.
The company has also stated that it will buy back about 500 million in Australian dollars in shares and endeavor to buy back the entire existing debt. Its aim is to maximize the return on investment from Australian ventures, thereby improving stockholder returns.