Australian casino giant Star Entertainment has been hit by a sharp fall in revenue from its wealthiest high-stakes foreign gamblers, dragging profit from its VIP program down 35 per cent in a year.
The group on Friday reported that a slump in VIP high-roller gambling had sliced its normalised net profit after tax by 8.4 per cent to $224 million.
The outlook for Australian casinos' programs catering to foreign high rollers particularly from China, who can turn over millions of dollars an hour, has become difficult to predict in the midst of the US-China trade war and softening economic growth in China.
The industry has also been rocked by revelations in an investigation by The Age, Sydney Morning Herald and 60 Minutes that Australia’s biggest casino operator, Crown, had gone into business with Chinese gambling recruiters with links to crime gangs.
The national casino industry is now the subject of multiple state and federal inquiries and faces the prospect of tougher rules governing high-roller operations.
"Solid" local gambling growth at Star's casinos in Sydney, Brisbane and the Gold Coast, lifted domestic profit before interest, tax, depreciation and amortisation (EBITDA) 5.4 per cent.
Star chairman John O'Neill said growth in its domestic business, which accounts for 88 per cent of group earnings, had not been enough to "offset declines in our international VIP business, which was impacted by weaker market conditions".
Chief executive Matt Bekier said Star management was focused on delivering savings through a restructure of the business, which had achieved $40 million in cost benefits so far, and bolstering visitation across its venues nationally.
"The group remains focused on executing our long-standing strategy of investing to drive visitation and earnings to our network of properties in sought-after destinations," he said.