Casinos operated by SkyCity Entertainment Group are coming back to life as more international high-rollers are making their way into these properties. They are not just spending more but are also winning bigger. The heightened activity is digging into the half-year profits of the company.
The gambling industry has been facing a lot of issues in recent years, but as the VIP business is finally rebounding, SkyCity is becoming the hub for the extra activity. The Australia and New Zealand-based Company’s turnover increased by 74 percent to $7.7 billion in the six months through December.
No way, it means that the company is doing any better. The record period also took away a huge chunk from the company as some lucky gamblers carried on some great winning streaks. The casino operator said on Wednesday that its half-year profits have fallen to $82 million, marking an 11 percent downfall. The revenue for the period remained relatively flat at $409 million.
SkyCity chief executive Graeme Stephens commented on the company’s performance saying that the reported level of the company’s wins for their customers, who were relatively luckier during the period shaved off some of its gains. However, he noted that they are considering the amount of play in their casinos more in this period of volatility, which showed stronger growth.
He said the company was lucky last year, as their win rate was above theoretical. The theoretical rate is 1.35 percent while the win rate of SkyCity was 0.98 percent. Stephens also said that the record turnover at their casinos was largely due to the international business of the company to third-party junket operators, bigger spending by punters and repeat visits from their major customers. He also noted that the company is set to bring its full-year results close to $13 billion to $14 billion.
The big news for SkyCity here is the return of the whales in the casino market. The industry went into a meltdown after the Chinese government arrested 19 former and serving staff members of Crown Resorts in 2017. Since then, the big-ticket Asian gamblers avoided the industry which led to a significant tumble.
Stephens still suggests that the return of these high-rollers to business is still volatile. It is very tough to predict for the next six months. He said that the whales had bounced back across the industry and as they are a small player, the small numbers are making a huge difference for them. He said that while Chinese authorities were arresting Crown Resorts staff, SkyCity was still building its business and is continuing to do so.
The company is currently struggling with difficult trading conditions in Darwin and staff restricting costs in Adelaide. Due to the dull profit figures, the shares traded at just $3.70, falling 2.3%. The company is selling Darwin venue for $188 million for which the final settlement could occur by June 30. All shareholders will be paid a 10 percent dividend.