While most Australian casinos are currently locked in their respective struggles to operate under constraints brought on by the Coronavirus pandemic, Crown resorts is embroiled in an altogether different fight for survival.
SkyCity Entertainment Group reported recently that its Skycity Adelaide venue would reopen on a limited basis following the lifting of some restrictions enacted by the South Australian government.
SkyCity Adelaide now only accommodates 100 members of the company’s Premier Rewards at any given time. Physical distancing measures have been implemented, and a limited number of gaming machines are available with limits of people per game table also being imposed.
Over the state line in Victoria, Crown Melbourne announced it would be complying with new measures from the state government, limiting seating capacity to 1,000 customers and capping client numbers in interior spaces to 150 clients or one person for every 4 square meters.
The company is currently awaiting the opening of its Metropol hotel on December 1, 2020.
Blackstone Group throws its hat in the ring
The US-based Blackstone Group seems to be positioning itself to take over Crown to preserve the embattled operator’s gaming license in New South Wales (NSW).
Crown is currently under investigation by NSW for several alleged regulatory transgressions at its Melbourne and Perth properties. For this, a temporary ban was imposed on the games at Crown Sydney.
The operator has asked for a monitored ‘proof of work’ of its Crown Sydney casino activities from NSW. Still, the operator has long fallen out of the good graces of the government, following a spate of recent accusations around the violation of anti-money laundering regulations.
Blackstone acquired a 10% stake in Crown earlier in 2020, after the operator’s largest shareholder, James Packer attempted to sell off 20% of the company to transfer it to Melco Resorts & Entertainment, the operator’s former joint venture partner.
Blackstone applied to the New South Wales gaming regulator in October 2020, requesting that it be allowed to increase its stake in Crown. This may not be enough to wholly save Crown as most feel that the operator would need to remove its entire leadership and management team, providing a clean slate that would likely lead NSW to approve the games at Crown Sydney.
According to a Reuters report, Blackstone is prepared to meet this condition. Packer himself stands to lose substantially from a deal of this sort as his 36% stake in Crown has been devalued following the dramatic fall of the company’s share price in response to the public allegations.
Moody’s downgrade
To add to Crown’s woes, Moody’s Investors Service recently downgraded the company’s credit rating to Baa3 which means there is only one notch standing between Crown and junk status. This is due to “an increasing likelihood of significant negative implications from the growing regulatory investigations Crown faces” at every turn in New South Wales, Victoria, and at a federal level.
Packer will likely see his shares reduce further in value once the NSW investigation, scheduled for February, concludes. The worst-case scenario for the operator is that the report could recommend that Crown Sydney’s gaming license be fully revoked. On the other hand, Crown could see minimal penalties being imposed on its gambling operations.
