Crown Resorts’ failure to open could spell trouble for NSW government accounts
The repercussions of Crown Resorts being unable to open its casino in Barangaroo is set to have big repercussions on the New South Wales government’s coffers.
The Sydney Morning Herald reports that NSW is already preparing to take a $190 million hit in casino tax revenue as a result of the coronavirus border closures, with budget forecasts showing it would take several years to recover that revenue.
If the James Packer-backed group is denied a licence or another company doesn’t take over the under fire casino, the government faces as much as $400 million in lost tax revenue.
This comes as a number of high-profile directors have left their Crown posts, including Andrew Demetriou, who resigned after gambling regulators in Victoria and NSW pushed him and Crown boss Ken Barton to leave after being heavily criticised in an inquiry that found the company unfit to run a casino.
The independent Bergin inquiry found that Crown Resorts is unfit to hold a casino licence in NSW, with a scatching report released this week confirming Crown had “facilitated money laundering”.
Gambling regulators in NSW and Victoria earlier took aim at Mr Barton and Mr Demetriou for their refusal to resign after being heavily criticised in the report.
Victorian Commission for Gambling and Liquor Regulation chief Catherine Myers said on Thursday she would demand the pair explain why they should be allowed to be involved with the group’s flagship Melbourne casino.
That came hours after her NSW counterpart, Independent Liquor and Gaming Authority chair Philip Crawford, said that Crown needed to part ways with Mr Barton and the former AFL boss Mr Demetriou if it ever wanted to open its new casino at Barangaroo.
Former Supreme Court judge Patricia Bergin found that Mr Barton was “no match for what is needed at the helm of a casino” and called Mr Demetriou’s appearance at her public inquiry “unedifying”.
Mr Crawford said there was no guarantee Crown would be able to make itself suitable to open the new casino in NSW.
Lost tax revenues to hit NSW bottom line
However, under the deal signed by the NSW government and Crown to open Sydney’s second casino, the regulator was contractually bound to work with Crown to try to make it suitable.
“They haven’t operated in this state yet and they may never. They’ve got a lot of work to do,” Mr Crawford said.
The Bergin inquiry also found Crown “disregarded the welfare” of its staff in China before 19 were arrested there in 2016, and went into business with high-roller junket tour groups linked to organised crime groups.
The report said Crown’s core problems were “poor corporate governance, deficient risk management structures and processes and a poor corporate culture.”
Crown chairman Helen Coonan said on Thursday that she accepted the criticism from the report and repeated “our unreserved apologies for these shortcomings”.
“We do not underestimate the scale of the problem and appreciate there is a need for a root and branch change,” she said.
“This change has commenced.”
Crown was set to open the gaming floors at its Sydney casino in late December but the regulator blocked it from doing so after evidence of money laundering at Crown’s Melbourne and Perth casinos emerged in the Bergin inquiry.
The delay will result in a hit to the NSW government’s coffers, with Macquarie market analysts this week saying it would take two years for Crown to do the restructuring required to be deemed fit to finally open its Sydney casino.
The most up-to-date published tax revenue forecast from casinos, which includes The Star and Crown resorts, was predicted to deliver the government $848 million between 2021/22 and 2023/24.
However, budget papers show the government was forecasting casino tax revenue to drop from $394 million in 2018-19 to $158 million in 2020-21.
It would not recover to $311 million until 2023-24.