Star plan to plug void

THE Star Entertainment Group has shifted its focus from uber-wealthy whales to a slightly smaller species of high roller as it reconciles a major hit to its VIP business.

In its half-yearly financial report on Thursday, Star reported statutory net profit after tax of $51m, down from $77m last year and two thirds lower than the $149m in 2018.

Pandemic-induced border closures delivered a 20 per cent hit to earnings at Star’s Gold Coast casino – but the results have been propped up by locals feeding eight per cent more dollars into the pokies.

The Sydney-based casino group reported gross revenue of $750m nationally for the six months to December 31, 36 per cent lower than the same period last year, and will not pay a half-year dividend to shareholders. An interim dividend of 10.5c per share was paid for the same period last year.

The results laid bare the company’s reliance on international VIPs, with turnover in that sector down 97 per cent, to $654m in the last six months of calendar 2020, compared to $21.2bn the previous year.

Regulatory changes also look likely to change the way high rollers are brought to The Star’s properties at the Gold Coast, Brisbane and Sydney, in the wake of a damning report into money laundering at rival Crown Resorts.

The report recommended an end to third-party VIP junket operations. The situation has left The Star, which had also used the services of junket operators, looking to what it calls International Premium Mass (IPM) customers to help plug the gap. While they don’t spend long days and nights at the betting tables, splashing up to $200,000 a hand like the Chinese whales, these new big spenders still have deep pockets.

CEO and managing director Matt Bekier said IPMs would be a key focus for the group once international borders opened.

“They are a super high-end international tourist,” he said.

“They come to Australia, they like to gamble, but it’s not the primary reason for their visit.”

Mr Bekier said IPM customers were based mostly in Asia, and used the traditional banking system to transact with the casino, so were not considered a money laundering risk.

In the meantime, domestic high rollers have stepped into the void. The Gold Coast had the biggest January domestic revenue result since the casino came under The Star banner.

Shares in Star closed 1c higher at $3.69 on Thursday.