Crown Resorts Shares Plunge, Bringing Packer’s Net Worth Down by $824 Million
After a severe reduction in the number of VIPs turning up at Crown Resorts, investor faith has been tested, causing the Australian casino giant’s shares to plummet. Prices have dropped to roughly 20% since mid-2018.
The plunge, as stated above, is being attributed to a significant reduction in the number of Chinese VIP gamblers in Australia and Macau.
The poor performance has also led to a massive reduction in James Packer’s net worth. Packer, who owns a 46% stake in Crown (via Consolidated Press Holdings), lost a whopping $824 million off his total net worth.
Not just Crown
However, it isn’t just Crown Resorts that’s going through a rough patch. Star Entertainment, a domestic rival, has also reported a 21% plunge in shares since September. Once again, this has been attributed to a reduction in participation from Chinese VIP gamblers. The slowing down of China’s economy and its ongoing trade feud with the US are said to be the underlying causes.
Macau is also experiencing a slowdown, and Las Vegas has reported a reduction in baccarat revenues, which is a key metric for determining the level of high roller activity.
Australian casinos experienced a jump in revenue after the VIP market in Macau took a hit from China’s crackdown on corruption. In 2014, President Xi Jinping launched a move to cut down corruption in the country. Macau turned out to be one of his primary targets, due to alleged reports of the gambling hub being used as a money laundering hotspot.
This, naturally, unnerved VIP customers, who chose to avoid Macau. Australian operators saw this as an opportunity and ramped up their efforts in the mainland.
However, in October 2015, employees working for Crown Resorts in China were caught, tried, and imprisoned for gambling crimes. This was a major blow to the company’s reputation, forcing it to stop all marketing activities in the mainland and withdraw from its projects in Macau, Las Vegas, and the Philippines.
But the recent reduction in performance is a result of the VIP sector practicing self-restriction. According to Wynn Resorts CEO Maddox, the Macau market has been going soft for some time with weekend performance being sporadic and mid-week numbers being “choppy.”
Packer resigned from the Crown board in March 2017, citing issues related to his mental health. The casino mogul is currently believed to be recovering in Los Angeles