Rank Group, owner of Grosvenor Casinos, Mecca and Spanish gaming giant Enracha, has announced a slump in year-on-year revenue in the third quarter.
The figures published today cover the 16-week period to mid-October and show that sales fell by 7.2% for Grosvenor casinos and by 5% at Mecca bingo. Grosvenor’s fall in like-for-like sales can be attributed to fewer high-spending customers placing bets, while Mecca’s fall in profits is due to a general decrease in footfall during the period.
A boost in online business
There was more positive news for the group regarding like-for-like sales online, with revenue rising by 1.7%, including a rise of 13.5% for its Spanish digital venture YoBingo.
The company’s Grosvenor brand saw a fall in revenue online, however, with a 5.2% drop in digital sales, which is thought to be due to tighter due diligence being carried out on customers before they can play for a certain amount of money.
The rule set out by the UK’s Gambling Commission outlined new anti-money laundering rules meaning that all customers who spent or won over €2,000 ($2,300) must be identified and verified.
The fall in revenue for Grosvenor comes after the company announced a so-called transformation programme for the brand, and thus far it is said to have found some effective cost-saving measures that will go some way towards offsetting the fall in revenue.
Investors getting nervous
Despite the ongoing money-saving measures the group is researching and implementing, investors appear to have seen this latest set of figures as a warning sign for the overall health of the group’s finances.
Rank Group’s share price fell by 2% during morning trading following the release of these latest figures. The fall in revenue comes just days after the Gambling Commission fined the group £500,000 for failing to comply with rules set out to protect problem gamblers, after a customer spent all £1m ($1.31m) in credit available on their account by gambling with the company.
At the time the company was told the penalty would have been a lot higher had they not been taking proactive steps to prevent such an incident from happening again in the future.
Grosvenor will announce its half-year results on 31 January, so directors do have a window to implement the cost-saving measures in order to influence those.
More companies hit by the slump
The global trend for the last quarter appears to indicate a slowdown in players spending large amounts of money on gambling. The global slowdown in interest in baccarat, one of the casino owners’ most loved and hated games, has hit many operators hard.
From the US to Asia, it seems that casinos need to find a new high-risk, high-earning game for their higher-end players as they are moving away from the game that always held their interest to date.
The Asian market’s slowdown, in particular, has been affecting companies such as Grosvenor, which is usually popular with the high-end tourist market.
Baccarat is a risky game for casinos because of the potentially high payouts, but it has been seen to generate large amounts of income, so much so that the game accounted for 88% of profits generated by Macau’s casinos last year.
The emphasis for Grosvenor and the Rank Group as a whole will be to implement the cost-saving measures they are already looking into, but also to be ahead of the game with the next significant trend that will be able to attract big-spending clients to turn things around.