Crown sees 28 percent decline in profit as foreign gamblers put less money on the table

Crown Resorts has reported a 28 percent drop in full-year profit as foreign gamblers, including high rollers from China, put less money on the table.

According to executive chairman John Alexander, the fall in profits was driven by "subdued market conditions." He also said Crown's contribution to the Australian economy had been "overshadowed" by allegations the gaming empire had links to organized crime, money laundering and arrangements for the fast-tracking of foreign visas.

Mr Alexander said Crown operates in one of Australia's most highly regulated industries with oversight from state gaming regulators and the anti-money laundering agency AUSTRAC (Australian Transaction Reports and Analysis Centre).

"It comes as no surprise that various regulators and other agencies have launched inquiries given recent media reports and the sensationalist nature of the allegations raised," he said in a statement to the stock exchange.

"Crown has zero-tolerance for criminal elements and we view these inquiries as an opportunity to continue our cooperation with regulators and other agencies."

Crown's normalized results, which strip out the variance in VIP gambler win rates, were down 4.7 percent to $368.6 million.

The allegations by Nine's 60 Minutes, The Age and The Sydney Morning Herald have been rejected by Crown via statements to investors and full-page newspaper advertisements, ABC News reports.

Crown's results show Chinese high-rollers have pared back spending after a 54.5 percent surge a year ago.

The fall in normalized earnings has hit the group's key properties with Crown Melbourne down 8.6 percent to $589.5 million, Crown Perth down 10.8 percent to $221.8 million and Crown Aspinalls in London down 46.5 percent to $6.4 million.

Crown's online gaming business — which comprises Betfair Australasia and DGN Games — has also been struggling, with earnings down by 2.7 percent to $26.1 million.

Away from direct gambling, Crown's non-gaming revenue was $273.million, down 1.5 percent, although hotel occupancy at key properties was steady.

JP Morgan analyst Donald Carducci said the key features of the Crown result were higher costs, lower revenues, and an uncertain outlook.

"[There was a] material decline in VIP turnover. Melbourne turnover -25.4 percent, Perth -30.1 percent and Aspinalls -29.6 percent," Mr. Carducci wrote in a note to clients.

"Operating expenses grew across the board while [there were] revenue falls in Melbourne, Perth, and Aspinalls."

Mr. Carducci noted, while Crown's cash flow was positive and the final dividend was sustained at 30 cents per share, the dividend franking rate decreased to 25 percent from 60 percent.

However, S&P Global Ratings analysts said the relative size and stability of the company's non-VIP operations lowered risks in the business overall.

"Crown's main floor gaming and non-gaming revenue has demonstrated resilience, mitigating volatility within its VIP business," they noted.