The Star’s super lucky win rate masks China VIP slowdown

Australian casino operator The Star Entertainment Group says it has become collateral damage of China’s crackdown on rival Crown Resorts.

Figures released Thursday show The Star’s net profit after tax shooting up 135.2% to A$141.8m in the six months ending December 31. However, ‘normalized’ profits – so named because they smooth out variance in VIP win rate – totaled A$107.1m, which was 17.7% less than the same period a year earlier.

The Star, which operates the Sydney casino of the same name, says the statutory profit rise was due to a serious run of good luck at its International VIP Rebate business. The Star’s benchmark VIP win rate is 1.35%, while this H1’s number was 1.62%, which further distorts the year-on-year comparison when you consider that the previous reporting period’s win was unusually low at 0.88%.

Similarly, statutory VIP revenue was up 63.6% to A$339.4m, while normalized VIP revenue was down 11.2% to $283m. VIP turnover was down 11.9%, partly due to the fact that VIPs were losing so much, but also due to “uncertainty” following the October 2016 arrests of 18 Crown staffers by Chinese authorities.