Posted on: October 6, 2023, 06:46h.
Last updated on: October 6, 2023, 06:46h.
There’s a possibility that Australian casinos could eventually see a resurgence of Chinese gamblers, who were once heavily involved in the country’s gaming scene. However, industry analysts from S&P Global Ratings suggest that this recovery may be further off than expected.
S&P Global analysts project that the recovery of affluent Chinese gamblers in Australia will likely take more than 18 months, even with the resumption of direct flights between the two countries. This decline is attributed to China’s economic slowdown and the preference among tourists for shorter trips.
However, it’s important to note that Star Entertainment and Crown Resorts have faced their own legal issues involving Chinese gamblers in the past, which may have also impacted the current situation.
The Shift in Asian Gaming Continues
Analysts Aras Poon, Shawn Park, and Tristan Ong suggest that it will take an additional 12 to 18 months for Chinese tourists to re-enter the market significantly. They highlight the substantial ground Chinese visitors need to cover to reach pre-pandemic levels in other markets.
Presently, Chinese tourists exhibit a preference for shorter trips, with a stronger focus on domestic travel. This aligns with the Chinese government’s strategy to boost the domestic economy through the promotion of domestic tourism and a decrease in tourist spending.
Australian gambling companies, such as Star Entertainment and Crown Resorts, have made positive changes by severing ties with Chinese junket operators after several investigations. However, the absence of these operators continues to have a negative impact on certain gambling markets, and experts at S&P Global Ratings predict that this influence will persist to some extent.
While a complete return to pre-COVID-19 pandemic revenue levels may not be universal across the Asia-Pacific region, most companies are expected to witness a return to normal earnings within the next 12 to 24 months, according to credit rating experts.
In recent years, Australian authorities have conducted inquiries into various gaming operators, including Star, Crown, and others, revealing extensive money-laundering activities, some of which involved Chinese junket operators. These operators were found guilty of allowing Chinese gamblers to use Chinese UnionPay debit cards to gamble in violation of Chinese law, disguising the expenses as purchases for hospitality and amenities.
Operators Should Prepare for a Backup Plan
18 months is a significant amount of time in Australia’s ever-changing gambling industry. The country is implementing measures that could limit the industry, and further challenges may lead to even stricter regulations.
Aside from Star and Crown, The Tower Hotel in Victoria recently halted gambling activities due to a lack of responsible gambling measures. The hotel faced a potential maximum fine of AUD758,172 (US$489,621), but the Victorian Gaming and Casino Control Commission (VGCCC) is imposing an additional fine of AUD1.4 million (US$881,548) on Rumotel, the hotel’s owner, for not having a responsible gambling officer in accordance with regulatory demands.
Other issues are also harming Australia’s gambling industry, such as reports of underage gambling increasing in the country, which will undoubtedly prompt lawmakers to take action.
Responsible gambling is currently a top priority for lawmakers worldwide, from Australia to the US to the UK. While Australia currently lacks federal gambling laws, the recent failures in responsible gambling may lead to changes in the legislation.
Additionally, China is pressuring countries to prevent its citizens from gambling abroad. Coupled with ongoing reforms in Australia, this could potentially make the country’s gambling scene less appealing to foreign gamblers 18 months from now.