Australia’ casinos face battle for VIPs
Australia’ casino sector saw it gross gaming yield (GGY) grow by 4.5% in 2007/08 (the latest year for which official figures have been published), reaching A$ 3.22 billion. The performance marked the second consecutive year for which GGY in the country’ casinos had been above A$ 3.0 billion. But despite growing revenues, the industry should not be complacent with its situation.

The Australian casino market faces fierce competition in the coming decade for the VIP casino customers from overseas – particularly Asia – that currently come to Australia to gamble.
The Australian Productivity Commission’ Draft Gambling Report highlighted this issue when it stated “casinos increasingly face strong competition in attracting globally footloose high-rollers as Asian competitors develop new, large facilities”. Having recognised this increased competition, the Commission suggested researching the practicability of exempting the casinos from certain of the recommendations it made in its draft report, specifically in relation to the VIP international visitors. 

Australia has 13 casinos with at least one casino in every states or territory. These casinos are operated by six different operators: Casinos Austria International, Federal Group, Lasseters Holdings, Crown Ltd, SkyCity Entertainment, and Tabcorp Holdings.
The number of casinos in Australia has remained the same since 1999. The liberalisation of the market started during the 1980s and 1990s and the casinos saw rapid growth in revenues. By 1986 eight casinos were operating in Australia and from the end of 1998 the number of casinos has remained stable at 13.
The period from 1999 saw consolidation in the market with some casino operators acquiring casinos. 
In 1999 Tabcorp acquired Star City Casino, whilst there was SkyCity’ acquisition of Adelaide Casino in 2000 and Darwin Casino in 2003 from MGM.
In 1994/1995 Australia’ casino gross gaming yield (GGY) was A$ 1.23 billion. By the turn of the decade in 2000/2001 this figure had more than doubled to A$ 2.54 billion and for the last two years (2006/2007, 2007/2008) GGY has been above the A$ 3.0 billion mark.
Casinos contributed around 18% of Australia’ total gambling revenues in 2007/2008. Within that casino contribution, the sole casino in Victoria – the Crown Casino – contributed 34% of the entire Australian casino GGY. Tabcorp’ Star City Casino in New South Wales contributed 22%. 
The states of Victoria, New South Wales and Queensland made up almost three-quarters of the casino market by revenues in 2007/2008.
Casinos Austria International (CAI) operates two casinos in Australia, the Casino Canberra in Australian Capital Territory and Reef Hotel Casino in Queensland. Casino Canberra is the only casino in the Territory which makes CAI the monopoly operator there. The Reef Hotel Casino in Queensland started operating in 1996 and is a boutique style casino. Alongside table games, the casino features around 500 gaming machines and the casino is situated within a luxury resort that features 128 rooms, a nightclub and several bars and restaurants.
The casino in the Australian Capital Canberra is located in the convention centre and in addition to casino games it offers a wide variety of entertainment. The casino is also host to numerous Texas Hold’em poker tournaments. 
The largest casino operator in the country is Tabcorp Holdings. Tabcorp operates four casinos in the country, three in Queensland and one in New South Wales. Its Star City casino in New South Wales is the only casino in the State. According to Tabcorp’ own estimate, its casinos’ market share of Tabcorp’ total operations for the year 2008/2009 was 44.7%.
Tabcorp’ casinos had 17 million visits in the same year. The total number of tables and machines in its casinos was 631 and 4,271 respectively. The number of machines in its casinos has been reduced compared, partly because of the smoking ban in New South Wales where its flagship casino, Sydney’ Star City, is located. 
In February 2009 Tabcorp announced a partnership with Hong Kong based junket operator Neptune to bring VIP customers to its casinos in Queensland and New South Wales. The aim was to bring larger groups of players which would reduce volatility and deliver greater stability to the VIP segment of casino business. By signing a deal with Hong Kong based junkets, Tabcorp was trying to secure itself against competition from Singapore, with its two new casino resorts. 
Looking to Asia, as part of its research for the latest edition of the Global Gambling Report, GBGC has been studying the rise of casinos in the region and has calculated that the GGY for Asia’ casinos rose by 4.9% in 2009 to almost US$18.9bn. Macau’ revenues grew by almost 10% in 2009. This was set against the performance of the global casino sector, which fell by 2.9% in 2009 over 2008.
2010 has already seen new casinos open in Singapore and Cambodia, whilst Macau has had a very strong start to the year, with first quarter gaming revenues up 57% on the same period in 2009. The next three to five years are likely to see new casino resorts open in the Philippines and Vietnam, and Japan too could finally pass legislation to permit casinos.
Australia will have to play close attention to these developments and the growth of casino markets in Asia because it currently sees a large number of tourists from the likes of Taiwan, Korea, China, and India visit its casinos.
The Productivity Commission reported that 18% of all revenues earned by Australia’ casinos were spent by international clients. In a submission to the Commission in April 2009 the Tourism and Transport Forum (TTF) presented data that showed that Asian countries accounted for the first eight places when a measure was taken of the percentage of each country’ tourists who visited Australia’ casinos during their stay. 
Almost half (49%) of Taiwanese tourists to Australia visited a casino during their stay. The remainder of the top five was made up of South Korea (39%), China (36%), Hong Kong (34%), and India (30%). It is no surprise that all of these countries offer few, if any, opportunities for their citizens to gamble legally in casinos. The majority of Korea’ casinos are for non-Korean customers, whilst India has a few casinos in Goa and Sikkim to cover a vast population.
26% of Singaporeans who visited Australia went to one of its casinos in 2008 and it will be interesting to see how this figure changes in the years to come now that the Marina Bay and Sentosa resorts have opened for business.
At the time of writing the final version of the Productivity Commission’ report had not been made public. But it is clear that Australia’ casino sector will face greater competition in the coming decade from neighbouring markets, all fighting for the high-spending casino customer. The Commission recognised this issue in its draft recommendations and it can only be hoped that the measures are still included in final version and are acted upon to maintain the growth in Australia’ casinos. 

Learn more about the Australian gambling market and the region’ casino markets in GBGC’ latest edition of its comprehensive Global Gambling Report