The continued deteriorating relations between China and Australia could have a detrimental effect on businesses in both countries, but especially in the Australian gambling industry. The two giant gaming groups, Star Entertainment and the Crown Group are eyeing the situation warily, in the hope that the tense relationship will not impact their billions of dollars in investments.
Both groups are heavily invested in projects that include upgrading casinos and the building of apartments and hotels to house the steady flow of Chinese and other Asian gaming tourists. However, if the situation continues to deteriorate, these projects may be in jeopardy.
Star Group Plays Down Fears
Matt Bekier, the chief executive of the Star Entertainment Group, played down the industry's fears. He said that there were concerns for the short term consequences of tense relationships, but that he had faith that things would improve over time.
"Of course we want a positive political relationship with Australia and China," he said. "China is our biggest and most important contributor to tourism growth."
"There is a risk that a strained environment could cause short term issues but we are extremely confident in the long term outlook," he added.
The Star Group is heavily invested in upgrade projects, including its investment in Brisbane's Queen's Wharf which now totals $1.2 billion.
Crown Group Relies on Chinese VIPs
The Crown Group continues to rely heavily on Chinese VIP players. The company has made no secret about the fact that the success of its $2 billion investment in Barangaroo lies in the company's ability to attract the high end of the local and international market.
Crown is even more sensitive to the results of crippling relationships after some of its staff were jailed in China in 2016.
Reversal in Market Trends
Before China began cracking down on VIP gamblers, Crown's revenue from these players stood at $65 billion, while Star Entertainment raked in $49 billion.
Compare these numbers to the first half of 2018, where Crown saw a relatively dismal $23 billion from VIP players, and Star reported on $31 billion.