Drop-off in gambling at Packer's casino a chip off the new block, by Vanda Carson - 28th July 2008
James Packer's Crown Ltd has been hit by a fall in the amount of cash gambled at its flagship Macau casino in the past two months, according to the company that provides its VIP gamblers.
A-Max Holdings, a Hong Kong-based "junket consolidator" responsible for introducing to Crown Macau more than three-quarters of its gambling turnover, told investors that the value of gambling-chip turnover was down an average of 10%.
At its results briefing A-Max chief executive Ted Chan said the key measure of casino profitability, referred to in the industry as rolling chip turnover, was down to $HK36 billion ($A4.8 billion) a month from an average of $HK40 billion. The turnover figure was 27% below analysts' expectations of up to $HK49 billion a month.
A-Max is a key partner of Crown's joint venture in Macau called Melco Crown Entertainment because it brings together several agents who entice big-spending, mostly Chinese VIP customers to Crown Macau and finances their gambling.
In the three months to the end of March, these VIPs turned over chips worth $HK151 billion at Crown Macau or an average of $HK50 billion a month.
Crown will report its figures to the end of June next month. Last week Citi slashed its target price for Melco Crown and its two major shareholders, Crown and Melco.
A-Max usually turns over chips worth $HK40 billion but said in June this had slipped to $HK36 billion and in July it had continued to be below average.
Its business is based on being a middleman that brings customers to casinos, then lends them money to gamble and helps casinos collect their debts.
"We experienced some drop in terms of rolling volume and also visitation in June," Mr Chan said. "We also witnessed this change in July as well."
Credit Suisse had predicted A-Max would generate on average $US6.3 billion rolling chip turnover a month in 2008.
Mr Chan blamed the fall on "lower volume" gamblers and said A-Max had tried to make up by targeting middle and high-volume players to spend more.
He said he believed the problem had been nipped in the bud because in the past 10 days turnover had improved.
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