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Australia – ‘Freakish’ baccarat run wipes $80m of The Star’s profits

By - 17 February 2016

Despite a ‘freakish’ run of luck by six Asian VIP players, Australian operator Star Entertainment has just delivered a 26 per cent increase in its first-half normalised net profit to A$142m due to strong domestic growth.

The Star revealed that an six high-rollers, betting big on baccarat, brought chaos to the group’s performance, stripping away almost $80m in profit over the six month period..

The Star’s target win rate of 1.43 per cent plummeted to just 0.88 per cent in the first half of the year.

Chief executive of The Star Matt Bekier said: “It was a freakish result. It was about six individuals who accounted for most of that loss. They were high rolling, big risk taking individuals who happened to have a lucky run here. They are all individuals who are well known to us, who have been coming here for many years, and normally we are ahead but this time they ended up ahead.”

The Star expects the high-rollers to return to the baccarat tables.

“Well I hope they do,” said Mr Bekier. “We’re clearly a lucky casino for them. There’s six very, very happy guests who we cannot wait to welcome back to our properties. We obviously do a lot of analysis on the play and the probability of that play. We’ve looked at it every which way. We looked at the distribution of bets, we looked at who, we understood the lifetime history of the players that won it, and it’s just bad luck. And bad luck and good luck are not sustainable. So this will normalise.”

Star Entertainment operates The Star in Sydney along with Jupiters Gold Coast and Treasury Brisbane in Queensland. Across the three venues table revenue was up 12.3 per cent with slot revenue up 7.4 per cent.

Chairman, John O’Neill, said: “1H FY2016 was another good performance period for the Group with continued improvement in the underlying earnings and progress made on all strategic priorities. The Star Sydney has led that sustained momentum as it delivers robust returns on the original $870 million transformation investment at the property. Those investments continue now at a substantial level on a Group wide basis.”

Normalised revenue performance at The Star Sydney was strong with normalised gross revenue of $885 million, up 7.9 per cent on the prior comparable period. Actual gross revenue of $738m was down 7.2 per cent on last year’s figures for the same period with solid volume growth across all lines of business offset by a low actual win rate in the International VIP Rebate business.

Queensland, where the group operates Jupiters Gold Coast and Treasury Brisbane, experienced solid normalised revenue performance during the first half, with gross revenue up 3.8 per cent to $353m with growth across table and slots, up six and 2.9 per cent respectively.

Mr. O’Neill added: “Significant progress has been made to establish and/or deliver on plans across all three of The Star Entertainment Group’s Integrated Resorts to position them as high quality, large scale tourist destinations. During the first half of 2016, the Group, along with our Destination Brisbane Consortium partners Chow Tai Fook Enterprises and Far East Consortium, reached contractual close with the Queensland Government on the Queen’s Wharf development. This exciting partnership with the Queensland Government to develop and operate arguably the most significant project in the history of the Brisbane CBD is an important strategic step for The Star Entertainment Group and secures the company’s long-term position in the Brisbane market. We are also making progress on our plans to continue to expand and improve our properties in Sydney and the Gold Coast. We have also advanced discussions with our Destination Brisbane Consortium partners to secure additional joint venture development opportunities at our Sydney and Gold Coast properties.”

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