During an investor presentation, Crown Resorts offered an update on the status of the AU$2.2 billion (US$1.6 billion) development in Sydney’s Barangaroo precinct, now set for early 2022. The company has made progress in putting in reforms to its plans, according to gambocor.com
The opening would be done in phases based on staffing levels until later in the year. Crown has 420 staff in gaming roles at Crown Sydney and that gaming areas were ready for opening.
Steve McCann, CEO of Crown Resorts said the company has instituted major reforms and turned the corner since last year, when Independent Liquor and Gaming Authority suspended its license over speculation of organized crime involvement in its business.
Crown says that “good progress” has been made on implementing the reforms brought out in the Bergin Report.
“It’s fair to say that the reform program was well under way before I joined Crown, and we have invested a lot of time and effort since then to continue on that path,” McCann said.
Crown has made significant progress on its remediation plan, overhauled the board, and worked through challenges from Covid-19. Today we have all three resorts open and operating.”
Crown was also subject to an investigation from Victoria’s Royal Commission, which also deemed the operator unsuitable for a casino in the region. Meanwhile, in Western Australia, an inquiry has been extended until March 2022 following a request from commissioners for more time to carry out their investigations.
Crown has developed a remediation plan to tackle the issues raised by various regulators. The plan focuses on key areas such as culture, responsible gaming, risk management, junkets, and VIP and significant players. In addition to an anti-money laundering and counter terrorist financing plan, a change to Crown’s senior management was also recommended.
Crown attests that the resort’s two gaming areas are ready for opening on a staged basis, subject to a determination of suitability by ILGA. The staged opening is dependent on current staffing levels, with Crown planning further recruitment for gaming related roles. The two gaming areas expect to have 160 table games and 70 electronic table games in operation by the time the floors are open to the public.
All three of Crown’s domestic venues—Perth, Sydney, and Melbourne— have reopened in some capacity with mandatory vaccination policies in place for customers.
Compared to the second half of 2020, Melbourne experienced a 75 percent increase in main floor gaming revenue and a 65 percent increase in non-gaming revenue for the two-week period that ended on December 5.
Crown has subsequently been the subject of a takeover proposal from private equity firm Blackstone, who values the company at approximately AU$8.46 billion. Having rejected the offer but invited Blackstone to make another proposal.
On the Blackstone bid, McCann added: “We’ll be looking at every alternative to try and maximize value, but the very first step is getting open in Sydney and making sure the market can see the value of these fantastic assets and get trading up post pandemic.”
Crown said it had seen business at its sites pick up in recent weeks, especially over the weekends, as Australia relaxed Covid-19 curbs, but flagged annual corporate costs to be higher than last year.
Melbourne is a lot harder to see how the recovery path will take place as it has only had around two to three weeks operating at full capacity, according to executives.
“Melbourne has been named the longest lockdown city in the world. We anticipate this will last until the Christmas and New Years’ period. Hopefully, we get office swells and city swells going into the new year.”
McCann is close enough to receiving approval for Sydney Barangaroo casino, according to the Sydney Morning Herald.
At issue for investors and analysts: how long it will take to restore its Melbourne flagship casino’s revenue to pre-pandemic levels; how long the $130 million of elevated costs will remain; and what portion of those are baked in.
That Crown has put a for sale sign on Aspinalls shows that the company wants to divest itself of non-core assets.
Investors need to guesstimate the size of the AUSTRAC fine, and they don’t know the outcome of the Perth Royal Commission investigation.
But McCann hopes to convince players sufficient steps were taken to rehabilitate Crown that investors should not consider the company as a fixer upper. The final look remains to be determined.
But the potential, according to McCann is to increase the gaming floor at Barangaroo and perhaps add another hotel in Melbourne.
But in Perth and Melbourne. revenue numbers are a harder sell. Staffing shortages pose a significant problem.
In other Australian news, legal expert Jamie Nettleton made a prediction for 2022. As a result of enhanced regulations, a number of smaller gambling operators will shut their doors or merge operations, according to Asia Gaming Brief.
A partner with Addison, Nettleton said despite the obstacles, Australia is still an attractive market for operators, both homegrown and international.
Much about the gambling sector in Australia in 2022 can be predicted from events in 2021. Crown will likely have a casino in Western Australia, despite the concerns of the Royal Commission about operations. Look for changes at the regulatory level with new casino regulators in New South Wales and Victoria as well as Western Australia.
Crown Resorts may well have a new owner.
Money laundering inquiries will spawn changes in regulations and conduct in Australia and other recommendations. One such recommendation could be the introduction of cashless gaming.
There could be even stricter enforcement measures if compliance measures are not incorporated.
These steps are likely to result in a number of gambling operators ceasing to conduct business or merging operations. In any event, we anticipate the number of corporate transactions involving gambling operators to continue with mergers, demergers and acquisitions continuing to take place. Despite many of the difficulties and regulatory changes highlighted above, we anticipate that Australia will still be an attractive gambling market and many overseas businesses will look to Australia as a natural extension of their global operations.
Look for mergers, demergers, and acquisitions to continue.
