Chips Are Down At Crown Macau

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Chips Are Down At Crown Macau

Sydney Morning Herald

Monday July 28, 2008

Vanda Carson

JAMES Packer's Crown Ltd has been hit by a fall in the amount of cash gambled at its flagship Macau casino in the pasttwo months, according to the company that provides its VIP gamblers.

A-Max Holdings, the 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 per cent.

At its results briefing on Friday night the chief executive of A-Max, Ted Chan, said the key measure of casino profitability, referred to in the industry as rolling chip turnover, was down to $HK36 billion ($4.8 billion) a month from an average of $HK40 billion.

The turnover figure was 27 per cent below analyst expectations of up to $HK49 billion a month. A-Max, a key partner of Melco Crown Entertainment, Crown's joint venture in Macau, brings together several agents who entice the big-spending, mostly Chinese VIP customers to Crown Macau, and finance their gambling.

In the three months to theend of March these VIPs turned over chips worth a total of $HK151 billion at Crown Macau or an average of $HK50 billion per 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 this had slipped to $HK36 billion last month and had continued to be below average this month.

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. We also witnessed this change in July as well," Mr Chan said.

Credit Suisse had predicted A-Max would generate, on average, $US6.3 billion rolling chip turnover a month this year.

Mr Chan blamed the turnover slump on fewer gamblers visiting from mainland China after Beijing introduced new visa restrictions last month, on gamblers using other casinos and on other junket operators amid fierce competition.

He believed the problem had been nipped in the bud because in the past 10 days turnover numbers had improved. "The number is swinging back quite nicely.I think we are back on track to first quarter this year."