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Star Vegas casino turns profit as VIPs chip in

Star Vegas casino turns profit as VIPs chip in

A new VIP gambling room at the Star Vegas Resort and Club casino in Poipet raked in nearly $700,000 in revenue during its first full month of operation, its management announced yesterday.

Joey Lim, managing director of Australian casino operator Donaco International Ltd, said the new gambling room operated by Macau VIP gaming promoter Heng Sheng Group was off to a good start.

“This [VIP room] is in its infancy, having launched on 20 September, but is currently meeting expectations, with revenue for the Company in its first full month of A$941,000 [$680,000],” he told shareholders attending Donaco’s annual general meeting.

Donaco completed its $360 million acquisition of Star Vegas on July 1. The ASX-listed firm hopes to increase VIP traffic to Star Vegas and has entered a three-year contract with Hang Sheng Group to funnel high-rollers to its gaming floor and handle customer service.

Lim said Star Vegas has performed well in the four months since Donaco took control of its operations. VIP rolling chip turnover increased 43 per cent with a “very healthy” 3.39 per cent gross win rate on this turnover in the September quarter compared to one year earlier.

According to Lim, Star Vegas pulled in the equivalent of $10.5 million in revenue from VIP gaming, $4.4 million from the main hall table games and $7.5 million from slot machines during the three months ending September 30. EBITDA at the casino increased 29 per cent during the September quarter, compared to the same period last year.

The results exclude revenues generated by the new VIP gambling room.

“Very few casino gaming businesses, whether listed in Australia or in Asia, are able to show such strong growth rates in the current market,” Lim said.

Star Vegas is the biggest and swankiest of nine casinos in Poipet, which attracts gamblers from neighbouring Thailand, where gambling is tightly regulated and casinos are outlawed.

Donaco’s push for VIP traffic at its Cambodian property comes as it pushes for more mass-market growth at Aristo International Hotel, its flagship property in Vietnam.

Lim warned shareholders of the risk of Aristo’s heavy dependence on high-rollers.

“If a VIP player has a big win, they can take their winnings away – effectively ‘hit and run’ – and the Aristo does not currently have the volume of smaller players around them to win back all of those losses,” he said.

Sacha Krien, a gaming analyst at HK-based brokerage and investment firm CLSA, said there was less risk of this happening at the Star Vegas casino owing to its scale.

“Star Vegas should be able to better cope with larger players because it’s a bigger business, so it’s less exposed to the fortunes of a couple of big players,” he said.

He added that VIP-oriented casinos need a critical mass to even out win-rate volatility.

The Star Vegas comprises four hotels with 385 rooms in total and a casino with 109 gaming tables and 1,284 electronic gaming machines. Its new VIP gaming room adds 50 baccarat tables.

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