Australian Land Casinos Revenue Declines
ASF Group Limited, an Australian investment, and trading company in partnership with China State Construction Engineering Corporation and CCCC Guangzhou Dredging Co Limited plan to build a $3billion AUD casino resort on the Gold Coast amid speculation the project will sail through. This comes after Chinese police arrested 18 employees of Crown Resorts Limited, Australia’s largest gaming and entertainment group. The arrests are part of the Chinese Authorities cracking down on unscrupulous officials believed to be laundering money through casinos overseas.
This move prompted the Chinese gamblers to leave, driving the Crown Resorts to register a 12% decline of its total revenue. Since the majority of VIP gamblers were Chinese, this was bound to happen. Crown has since sold more than half of its stake to Melco Crown Entertainment based in Macau for $1.6 billion AUD as it plans to build a $2 billion AUD casino and a 6-star hotel in Sydney. The project, however, seemed like a long shot, considering the financial uncertainty due to its big VIP revenue decline. Crown’s chief James Parker, however, argued that the resort will not target local gamblers, but instead attract wealthy Chinese suppressed by the nation’s anti-gambling laws. After much deliberation, the state government finally approved the project.
The crackdown has also led to Aquis Australia to put its $8 billion AUD casino resort project on hold. The company, which is run by Tong Fung, a Hong Kong billionaire, and his son, still plans to invest $307 million AUD in its casino in Canberra amidst the setback.
Macau, the world’s largest gaming center with more than $13 billion AUD in annual revenues also showed major declines following the Chinese crackdown. Revenue declined for a record 26 consecutive months. The gaming center seems to be showing signs of recovery.
Most of these major casino resort projects are banking on apartment sales linked to the resorts to support the developments. These companies are capitalizing on the 10 percent increase in the cost of apartments in Australia. Some analysts, however, sense a slowdown in demand for these apartments. Even so, the Queen’s Wharf project supported by Star Entertainment, the Australian arm of Far East Consortium and Hong Kong-based Chow Tai Fook plans to build a $3 billion AUD residential tower blocks in Brisbane.
Amid all the setbacks, ASF’s director, Louis Chen is optimistic the Gold Coast project, which comprises of theaters, 5 and 6- star hotels, a beach club and a lineup of entertainment will push through this situation.