Australian casinos count billion-dollar cost of missing Chinese high-rollers

You’d be brave to suggest that Chinese billionaires, or even mere multi-millionaires, will be coming back to gamble in Australia’s casinos any time soon.

Sorry Kevin, but your famous quote has been rendered “inoperative” in downunder casino-land.

Yes, our two main casino groups, Crown and Star, certainly “built it” – to the tune of some billions. But then, “they did not come”.

And you’d be brave to suggest they – most specifically, Chinese billionaires and even mere multi-millionaires – will ever be coming, any time soon.

And certainly not on private casino jets and on arranged ‘junkets’, like they did before all those pesky Royal Commissions and even peskier profit-sapping multi-million dollar fines. Marx, Lenin and Chairman Mao would, incidentally, all be spinning madly in their graves at the conjunction of those words: so many billionaires from communist China flooding capitalist casinos.

Crown and Star poured close to $8bn into expanding and upgrading their casinos - on the Gold Coast; in Melbourne, the home of our very own downunder, China-acolyting Chairman, Dan; and most especially, and expensively, staring across Darling Harbour at each other in Sydney. It was all predicated on the lovely loot expected to be shovelled into their tills by Chinese ‘whales’ – high-rollers – and the more common and garden Chinese tourists.

Yes, true, also by the local ‘grunt’ market as well – especially at Crown in Melbourne, and to a lesser extent its casino in Perth and Star’s ‘bogan central’ on the Coast, where only black thongs are permitted after five.

And all of it embarked on before Covid and lockdowns, and flight bans, and those pesky Commissions. In the 2018-19 financial year, Star and Crown collectively reported a tasty $1.1bn of revenue from the so-called ‘VIP’ segment, adding to 20 per cent of their $5.5bn total combined revenue. Now Star has reported revenue for the first fully post-Covid 2022-23 year of some $1.9bn – yes, up from 2022 but down a thumping 25 per cent from its pre-Covid 2019 figure. And how much of it came from the so-called ‘VIP’ punters?

Well, zero, zip, nada.

And how much did Star have to say about VIP punters and the future prospects of clipping their tickets?

Well, also, zero, zip, nada.

We haven’t seen the Crown 2023 numbers, since it’s disappeared into global investment giant Blackstone, following its $8.9bn takeover.

But its 2022 results showed total revenue of just $1.9bn – true, including the last of the Covid lockdowns in Melbourne and Sydney in late-2021 – down 43 per cent on 2019. We saw in the Star report Tuesday the consequence of all those ‘missing’ Chinese tourists: writing a thumping $2.2bn off the ‘value’ of its casinos. Basically, that money was poured into a lot of concrete and into the bank balances of a lot of tradies and straight down the toilet.

Sure, directors and managements could not have foretold Covid when they embarked - with eyes ablaze with dollar and yuan signs – on their multi-billion dollar spends. But as the Royal Commissions exposed, the ‘China strategy’ was always fundamentally flawed, based on breaking the rules and indeed the law. Further, even at the best of times it was only ever marginally profitable.

Big revenues: yes. Bottom line profit: marginal.

It’s now gone. But the casinos remain ‘built’.

Originally published as Australian casinos count billion-dollar cost of missing Chinese high-rollers