S&P Global says Australian operators shouldn't rely on Chinese tourist earnings
Date: 2023-10-06 Author: Kirill Zagoruyko Categories: CASINO
The Australian gambling market has long relied on wealthy Chinese tourists as a source of additional income. With gambling banned in most of China, Australia has long been a preferred destination for gambling tourism.
However, recent COVID-related headwinds in China have forced this revenue stream to stop for a while. While the zero-COVID policy is no longer in effect and direct flights between the two countries have resumed, it will likely be some time before Australia's casino operators can once again count on Chinese tourists.
According to business analyst S&P Global, the influx of Chinese customers is unlikely to return to pre-pandemic levels for at least 12 to 18 months. According to the firm, this slow recovery is due to the stagnation of China's economy and the tendency of Chinese people to prefer shorter trips.
S&P analysts Aras Poon, Sean Park and Tristan Ong expect Chinese customers to eventually start returning, although it will likely take more than a year.
Experts also warned that the recovery will not be uniform across Asia-Pacific businesses, with most companies returning to pre-pandemic levels within a year or two.
Australian companies broke laws to make money from Chinese tourists
Australia's gambling market used to depend on wealthy Chinese customers for extra income. However, local operators eventually cut ties with the Chinese operators, who refused services.
Eventually, local regulators began investigating companies such as Star Entertainment and Crown Resorts, which had previously collaborated with such companies. Two Australian casino and hospitality giants have been found guilty of multiple gambling violations in their respective states, prompting lengthy investigations.
One of the two companies even had an unregulated gambling platform where VIP clients, including wealthy Chinese citizens, could play. Both companies also allowed Chinese customers to gamble using UnionPay debit cards, which is a gross violation of Chinese laws. This fraud was made possible by Star and Crown falsifying paper trails.
Some have speculated that the cessation of such illegal activities could also be a reason for the slowdown in tourism from China.
At the same time, China is keen to prevent its citizens from participating in gambling altogether, which could spell bad news for Australian businesses expecting an influx of Chinese tourists.
Either way, S&P analysts suggest, Australian operators will have to secure additional revenue streams if they face growing regulatory hurdles in the country.
However, recent COVID-related headwinds in China have forced this revenue stream to stop for a while. While the zero-COVID policy is no longer in effect and direct flights between the two countries have resumed, it will likely be some time before Australia's casino operators can once again count on Chinese tourists.
According to business analyst S&P Global, the influx of Chinese customers is unlikely to return to pre-pandemic levels for at least 12 to 18 months. According to the firm, this slow recovery is due to the stagnation of China's economy and the tendency of Chinese people to prefer shorter trips.
S&P analysts Aras Poon, Sean Park and Tristan Ong expect Chinese customers to eventually start returning, although it will likely take more than a year.
Experts also warned that the recovery will not be uniform across Asia-Pacific businesses, with most companies returning to pre-pandemic levels within a year or two.
Australian companies broke laws to make money from Chinese tourists
Australia's gambling market used to depend on wealthy Chinese customers for extra income. However, local operators eventually cut ties with the Chinese operators, who refused services.
Eventually, local regulators began investigating companies such as Star Entertainment and Crown Resorts, which had previously collaborated with such companies. Two Australian casino and hospitality giants have been found guilty of multiple gambling violations in their respective states, prompting lengthy investigations.
One of the two companies even had an unregulated gambling platform where VIP clients, including wealthy Chinese citizens, could play. Both companies also allowed Chinese customers to gamble using UnionPay debit cards, which is a gross violation of Chinese laws. This fraud was made possible by Star and Crown falsifying paper trails.
Some have speculated that the cessation of such illegal activities could also be a reason for the slowdown in tourism from China.
At the same time, China is keen to prevent its citizens from participating in gambling altogether, which could spell bad news for Australian businesses expecting an influx of Chinese tourists.
Either way, S&P analysts suggest, Australian operators will have to secure additional revenue streams if they face growing regulatory hurdles in the country.
