Online gambling

Casinos operator Crown says some of its operations may experience "some dislocation" in the next year or so due, to the global economic downturn, but will recover.

 

Crown said its properties were performing relatively well against their peers and their geographic spread should mitigate some of the risks associated with a downturn.

 

"While some of the markets in which those businesses are located may see some dislocation in the next 12 to 18 months, taking a two to three year view we believe they are likely to return to steady growth trends," Crown chief executive Rowen Craigie told shareholders at the company's annual general meeting.

 

Crown benefits from a strong balance sheet with strong cash flows and interest cover.

 

"We believe it is important to continue to invest for growth in our existing businesses through this economic cycle," Mr Craigie said.

 

Asked if Crown would consider acquiring gaming companies that looked cheap in the current economic environment, executive chairman James Packer said Crown would be focusing on the refurbishment of its Crown casino in Melbourne and the Burswood casino in Perth, and the completion of its acquisition of Cannery Casino Resorts in the US in the near term.

 

"I think that the important thing for Crown at the moment is to implement well the capital expenditure program that's existing in Australia and to bed down the Cannery acquisition," Mr Packer said.

 

"I think we then would still be in a position to do more [acquisitions] if we found something that was compelling, but our plates, we have a lot on them..."

 

Mr Packer said at this stage, Crown was not looking to buy the casino assets of Tabcorp Holdings Ltd.

 

Mr Craigie said recent trading at Crown's Australian casinos continued to be solid.

 

Combined revenue from table games and gaming machines was up four per cent in the period from July 1 to October 21, compared to the same period in fiscal 2008.

 

"Year-on-year growth in international VIP commission program play has been very strong over the same period," Mr Craigie said.

 

There had been some softness in takings for low-end gaming machines, corporate events and corporate hotel bookings.

 

But this had been offset by solid growth in other segments, such as table games, high-end slot machines, leisure hotel bookings and private functions.

 

Crown's Australian casinos earnings before interest, tax, depreciation and amortisation (EBITDA) rose 8.2 per cent in 2007/08.

 

"We expect solid growth in 2008/9, despite the anticipation of a more difficult trading environment and the disruption from the casino refurbishment programs," Mr Craigie said.

 

Mr Craigie was positive about Crown's investments in Macau. Crown Macau, a VIP casino, opened last year, and a second casino property, City of Dreams, is under construction.

 

Crown's investment in Macau is through its 37.9 per cent stake in the Melco Crown Entertainment joint-venture.

 

Mr Craigie said Crown expected that moves by the Macau government to halt further land grants for casino developments, and possibly limit the number of gaming tables operating in the former colony, would be positive for the incumbent licence holders.

 

"Melco Crown expects that these changes will generally be positive for the six incumbent licence holders in Macau," Mr Craigie said.

 

He noted the Chinese government had imposed some restrictions on the ability of some Chinese citizens to obtain visas to travel to Macau.

 

"These changes are targeted at moderating the extraordinary growth in Chinese visitor numbers to Macau," he said.

 

"We have seen the impacts of the latest restrictions in September with year-on-year gaming revenue growth for the month declining by about three per cent.

 

"However, over the medium term, we have confidence that the Chinese and Macau governments will manage the visitor flow and the approval of new gambling product in Macau to ensure an ongoing sustainable casino and tourism industry in Macau with balanced growth rates."

 

In the US, the regulatory approval process for the Cannery acquisition was progressing.

 

Revenue at Cannery's Pittsburgh casino, The Meadows, was up 14 per cent for the September quarter despite the US economic downturn.

Crown shares were 18 cents lower at $5.89 on Tuesday.