The new venue of leading Australian casino operator Crown is expected make half a billion AUD in the first financial year – generating $100M in corporation tax. The figure doesn’t make for a bad start considering the difficult macro-economic conditions in the world, but compared to the Melbourne Crown Resorts casino – this is just one quarter being generated for local tax coffers. These numbers are disappointing for a new casino business which for a long while has been tipped to create bigger and better casino business models.
Experts have come to the conclusion that the gambling floors within the Crown Resorts Sydney location are not going to be up to par when it comes to delivering top-line value to the sector. In the coming years – this balance between the competing Crown Resorts locations will possibly be restored. Sydney’s tallest skyscraper has major challenges in fulfilling as much revenue as it promised – unless the Australian casino regulators will afford them special privileges in its operating license.
With the wealthiest gamblers turned away from the allure of casinos for several long years in a gradual decline already, it becomes increasingly difficult to fill the shortfall on margin estimates each year for elite gambling financial officers working in the business side of operations. With the high-roller market completely decimated, it becomes increasingly difficult to find new customers. The financial pressure comes amidst law enforcement investigations into the casino for engagement with money laundering operators.
Despite these setbacks, Crown has continued to press forward with its plans to open a new casino and hotel resort in the centre of Sydney. The $2.2bn project has sat in a limbo state for the previous couple of years, awaiting approval whilst investigators deliberated over the viability of Crown to be allowed to hold a domestic gaming license at all. Finally opening up in 2020 but without a casino, the group has been bought out by private equity firm Blackstone – the new ownership takes effect immediately at the beginning of Q3, July 1st.
Tax Authorities in the US Estimate Crown Sydney to Make $500M pa.
The revenue that is expected to flow into Crown Sydney will surpass $500M in its first year of operation, according to an Australian Treasury estimate of $100M in corporation tax payments arising from the entity in Australia’s richest city. Considering how much Melbourne Crowns able to make – an equivalent sized venue within the group – that’s four times what Sydney’s new resort is expected to rake in. By any account these numbers are exceedingly disappointing and should be subject to major scrutiny by management accountants working on the corporate side of the business.
The casino had promised to be a major cash generation vessel in terms of windfall for the state tax coffers – but this forecast made back in 2013 is already looking much less likely at materialising than when it took place. With the increasingly difficult market conditions facing the casino, it seems highly unlikely that Crown Sydney will become the high-roller hotbed it was promised to become back when it began raising capital to fund the project. Unfortunately for Crown, competition in Sydney is fierce, and many analysts believe the current operating license afforded to Crown is too restrictive, not allowing them to play poker-machines as part of the package.
The opening of a new casino resort in Sydney is excellent news for local labour markets though, upwards of 2,000 jobs are expected to be created as a direct result of the project. Many of the pre-existing executives working for the company have been phased out of powerful positions, and the consensus opinion offered by many in the space is that the new Crown Resorts should be a direct improvement and vastly move away from the typical issues that plagued the predecessor.
Crown Casino is undergoing an immense transformation phase with the sale to Blackstone. With ex-CEO James Packer selling his controlling stake in the firm of 37% for $3.3bn. The Independent Liquor and Gaming Authority (ILGA) has told the casino that it reserves the right to remove the casino’s operating license if it breaches any of the strict laws now placed upon the entity. These include not engaging with junket operators, increased due diligence on customer profiles, and better investigations onto the origins of customer funds at the casino.
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