Crown Sydney’s pokies fate sealed
The New South Wales government has cemented the near term financial fate of James Packer’s Crown casino at Sydney’s Barangaroo, according to the Sydney Morning Herald.
The government inked a deal with rival The Star, confirming it as the exclusive casino rights operator of poker machines for the next 21 years.
Crown’s lobbying efforts to alter the terms of its existing agreement that would have banned pokies had been determined and abiding.
Over the year, the lobbying was spearheaded by Crown executive and former national secretary of the Labor Party Karl Bitar and former federal Labor minister Mark Arbib.
Government insiders have suggested that Crown came close to signing a memorandum of understanding a few years ago with then-NSW opposition leader Luke Foley to revisit Crown’s poker machine machine.
Under the government agreement signed with The Star, if the exclusivity deal is altered, the incumbent casino pokie operator will receive nonspecific compensation.
Many casino analysts had assumed a strong likelihood Crown would ultimately be successful in its quest to remove the slot ban.
The Star’s share price initially spiked more than four per cent Monday and the regulatory certainty on slots was one of the main reasons.
The partial reopening of Star’s Sydney casino complex on Monday and a new tax deal with the NSW government were the other two pieces of news that sent shares higher.
For Crown, having its poker machine ambitions thwarted places additional pressure on the economics of its Sydney casino, whose licence approval was originally successful on the basis that it would be an ultra VIP casino that would cater to Asian high rollers rather than the Australian market.
Not only did the international VIP market fall after Crown employees were arrested in China in 2016, but COVID-19 has successfully killed international tourism for an unknown period, impacting all Australian casinos.
Additionally, the growing diplomatic tension between Australia and China may lead to heightened pressure from the Chinese government to discourage VIP punters spending in Australian casinos.
Gone too are the hopes that Lawrence Ho’s Melco could help funnel VIP players into Crown.
Melco bought a 10 per cent stake in Crown from Packer last year and agreed to increase his holding to 19.9 per cent.
The second tranche of the deal was later abandoned and Melco sold its 10 per cent a month ago.
Doubts cast over Crown Resorts’ Sydney VIP market
Gaming giant Crown Resorts has been wooing punters at some of Sydney’s largest clubs and RSLs, as doubts grow about visits from Chinese high rollers when its new Barangaroo casino opens next year.
The Sydney Morning Herald reported last month that the $6 billion group held an invite-only event at one of the city’s most profitable pokies venues, Fairfield RSL, on February 6.
It invited 24 of the club’s loyal patrons and around 100 of Crown’s existing loyalty members who visited its existing Melbourne and Perth casinos.
Crown representatives were on hand to sign RSL members up to its Crown Rewards loyalty program at the event.
The casinos group also recently held an event at West HQ – formerly known as Rooty Hill RSL – which was limited to existing Crown customers.
It also approached Bankstown RSL early this year about holding an event but it never went ahead because COVID-19 forced the club to shut, according to club chief executive Mark Condi.
The ASX-listed casino giant declined to comment on its relationship with clubs and RSLs and would not say whether additional events will be held at Sydney locations.
In a statement, Crown chief executive Ken Barton said that Crown Sydney “has always, at its heart, been a destination designed for both Sydneysiders and visitors alike.”
“We are looking forward to opening our doors later this year and playing our part to help boost the domestic travel and tourism economy,” he said.
Alliance for Gambling Reform advocate Tim Costello said Crown’s involvement with clubs appeared to be an “attempt to enlist locals” for its new casino.
“Loyalty programs are just absolute gold, and this, in my view … there is no doubt it’s just to sign up people for Barangaroo,” Mr Costello said.