Supplier News
Australia – Crown bemoans VIP tax in Melbourne
By Phil - 26 February 2014
Australian operator Crown Resorts has slammed the levels of taxation imposed on high-roller gambling claiming it is making its Melbourne casino uncompetitive with other casinos in Australia and Asia.
Crown Resorts Chief Executive Rowen Craigie said the Melbourne casino would suffer if the levels of taxation were not addressed.
“Melbourne will be trying to compete with one hand behind its back relative to the other casinos,” Mr Craigie said. “The Melbourne property is certainly of a quality standard that makes it competitive with the properties in Macau and Singapore, but we have a set of tax arrangements in Melbourne that are unique to Crown Melbourne and that’s namely the imposition of a super tax on the VIP business. The effect of that at the moment is that Crown Melbourne is paying an effective tax rate on VIP play of about 14 per cent, which compares to the 10 per cent in NSW. That higher tax rate inhibits Crown Melbourne’s ability to use marketing and other incentives to attract VIP players.
His comments came as Crown reported a 111.6 per cent rise in net profit for the six months to December 31 to $382.4m due to its operations in Macau via its partnership with Melco Entertainment.
However revenue at Crown’s Australian casinos in Melbourne and Perth dropped sharply with VIP turnover dropping 25.6 per cent to $23bn, and main floor gaming revenue dropping 0.6 per cent to $757.7m.
VIP turnover at Crown Melbourne fell 33.1 per cent to $16.2bn.
Mr. Craigie, said: “Overall, we have seen weak consumer sentiment that has adversely impacted trading at both Crown Melbourne and Crown Perth. The results for those resorts were below expectations and reflect the fact that their local economies are experiencing structural and cyclical challenges. Compared to last year, normalised EBITDA was down 4.6 per cent in Crown Melbourne and down 4.1 per cent in Crown Perth and main floor gaming revenue was down 0.6 per cent across Crown Melbourne and Crown Perth.”
“VIP program play turnover was well below expectations, particularly at Crown Melbourne, which was down 33.1 per cent on the prior year, reflecting the competitive challenges facing Crown Melbourne.”
“In contrast, Melco Crown Entertainment has achieved another record result, with significant year on year growth across both the VIP and the mass market segments. This record result was the major contributor to the growth in Crown’s normalised NPAT. Crown’s share of MCE’s normalised result for the period was an equity accounted profit of $140.6m, up 118 per cent on the prior year. After adjusting for an above theoretical win rate and pre-opening costs, Crown’s share of MCE’s reported NPAT result for the half year was an equity accounted profit of $147.5m.”
Crown stated: “Macau continues its strong upward trajectory with total gaming revenues growing at approximately 19 per cent in 2013 with strong growth in both the VIP and mass market segments. The Macau and Mainland China Governments remain highly supportive of Macau’s long term growth, as highlighted by the progress on their infrastructure and regional development blueprint, including the rapid development of Hengqin Island, improved immigration facilities, the development of the Macau Light Rail system and the Hong Kong – Zhuhai – Macau Bridge.”
In the UK, normalised EBITDA from Crown Aspinall’s was $17.6m, down 16.6 per cent.
Mr. Craigie said the aim now was to boost revenue growth, cost control and margins in Melbourne and Perth, manage the development of a new hotel at the Perth property and the proposed casino-resort in Sydney, and help Melco Crown Entertainment with its development projects in Macau.
