Betting on the house
Thursday, 15 May 2008
Last Updated: Wednesday, 14 May 2008
By Robert Bryant
The casino industry in Australia can rely on a steady stream of revenue from local punters. But in recent years they have taken a punt on growth in overseas markets such as Asia and the United States.
Death and taxes are supposed to be the great certainties in life, but in Australia you can add gambling to that list. Year in, year out, Australians spend basically the same proportion of their disposable income having a flutter.
That makes the casino industry one of the extraordinarily stable, if low-growth, sectors in Australia. In the past five years, the industry grew at an average annual rate of 2.5%, helped in part by a string of big mergers involving Tabcorp (which acquired New South Wales company TAB Limited and Queensland’s Jupiter Group) and Crown (which, while is was known as part of PBL Limited, bought Perth’s Burswood Casino).
Casino operators, particularly Crown, have pushed into the Asian and US casino industries to chase growth opportunities. Crown has targeted the booming island of Macau, where it has one casino and is building another.
For fiscal 2007-08, IBISWorld expects that the forecast of stronger international and domestic economic growth, together with some increasing domestic travel and international visitor arrivals, will lead to some stronger real growth in industry revenue.
Profits will continue to increase due to the past industry consolidation processes. Major operators will continue to expand internationally, as low revenue and profit growth continues in the domestic market.
Geographic spread 2007
Casino handle/turnover by state
Products and service segmentation
Industry outlook
Year |
Revenue ($ millions) |
Growth |
2008 |
$3937 |
3.0% |
2009 |
$4047 |
2.8% |
2010 |
$4128 |
2.0% |
2011 |
$4268 |
3.4% |
2012 |
$4418 |
3.5% |
2013 |
$4572 |
3.5% |
IBISWorld forecasts that the casino industry will grow at an average annual rate of 3% during the five year period to 2012-13. For fiscal 2009, IBISWorld expects that forecast continuing strong international and domestic economic growth, together with some increasing domestic travel (associated with cheap airfares) and international visitor arrivals, will lead to some stronger real growth in industry revenue.
Key statistics |
Value |
Industry revenue |
$3722 million |
Revenue growth (2005 to 2006) |
2.4% |
Number of enterprises |
5 |
Employment |
18,668 |
Exports |
$767 million |
|
From fiscal 2010 onwards, the domestic industry will remain in a low real revenue growth cycle, due to market saturation and continuing competition from other gambling forms. However, it is likely that major operators will commence to have a significant portion of revenue growth and profit generated from their expanding international operations.
In the short term, the competition for the premium (or high stake players) both from domestic and international sources will continue to be very intense and some casinos have actually reduced their incentives and rebates given to this market due to significant losses (and volatility in profit levels) incurred in this area.
Over the outlook period, due to the highly competitive environment, this will require an on-going and increasing level of professional management at all levels of operation in all casinos to ensure that individual operators will remain viable.
IBISWorld supplies business information databases, including industry reports, company reports and business indicator reports. www.ibisworld.com.au
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