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Crown Sydney casino left 'high and dry' after betting on lure of VIP gamblers, expert says
The future of Crown Resorts' Sydney casino will hinge on whether it can diversify away from high-rollers, experts say, as economic conditions force the company to close one of its floors and shed almost 100 staff.
The company cited "macro-economic challenges" for its decision this week to close one of its two gaming floors, just a year after it opened in Sydney's tallest skyscraper.
The casino, which has been operating on a conditional licence since August last year, said it will "consolidate" its VIP casino facilities and try to deploy some of the 95 affected staff to its other casinos in Melbourne and Perth.
The company, which was formerly backed by James Packer, said it intends to reopen both floors once business improves.
"Crown has made a decision to consolidate its two VIP casino floors in Sydney in response to the current macro-economic challenges facing our industry alongside other Australian businesses," a spokesperson said on Thursday.
"Unfortunately, this decision will impact some of our team members and we are working with them and their union to consult on their options in the hopes of placing as many as people as possible in other roles. Our priority is to support our people through this process, and manage these changes with care and respect."
But Ben Lee, an Asian gaming consultant based in Macau, said the casino was likely to continue struggling while it remained a VIP-only casino.
He said an economic downturn in China, the main source of outbound high-rolling gamblers, and the Chinese government's crackdown on junkets had left Crown's Sydney business "high and dry".
"[It's] up the creek without a paddle. That was a property that was predicated on a burgeoning and robust international VIP market," Mr Lee said.
"Even in Macau, our VIP [market] is probably down to about 30 per cent of what it used to be pre-COVID and that is a direct function of China's crackdown on junkets."
The casino is prohibited from engaging with junket operators, after an earlier inquiry found Crown was turning a blind eye to money laundering in its Melbourne and Perth casinos.
Earlier this year, Crown and the Australian Transaction Reports and Analysis Centre agreed to a $450 million penalty over historical breaches of anti-money laundering laws at its Melbourne and Perth casinos.
Mr Lee said while the gaming industry across South-East Asia was recovering, Australia was "still very much down the totem pole" and unlikely to lure back high rollers in large numbers.
"So whatever hope the New South Wales government may have had about incremental revenue income from Barangaroo bringing in from overseas, I think they can just about well forget it," he said.
It comes amid negotiations between Crown and the Minns government about a proposed gaming tax increase.
Earlier this month, the government reached an agreement with rival The Star to scrap a proposed poker machine tax increase of up to 60.67 per cent.
The rate will instead rise to nearly 23 per cent in 2027 and will not lift again until 2030 — a move the government said would protect the viability of The Star and 3,000 jobs.
Monash University gambling researcher Dr Charles Livingstone said there was no doubt Crown's business in Sydney would remain viable, but the casino component would need a re-think.
"Crown Barangaroo is a real estate development with a casino attached," he said.
"They're not going to abandon the casino, but I think that in order to make the sort of money they want from it they're going to have to change their business plan."
Dr Livingstone said that would likely mean a pivot to poker machines, though they are not permitted under the restricted licence Crown currently holds in Sydney.
""Every casino in Australia has poker machines, and there's unfortunately not a shortage of customers of poker machines in Australia."
Mr Lee agreed the decline in high roller tourist numbers would hasten any plans to try and have poker machines in Crown Sydney.
While current laws prohibited this, Mr Lee argued Crown already had a "foot in the door" because the casino already had electronic table games.
"Really, there is no barrier to them having pokies," he said.
Crown's restricted gaming facility licence in NSW remains in place until April next year.
In a statement, the NSW Independent Casino Commission (NICC) said it has been closely supervising Crown Sydney's management, operations and governance.
The NICC said it would soon begin an assessment into Crown's suitability to operate its casino and "give effect to its licence".
Editor's note 28/08/2023: An earlier version of this story stated that the Crown casino in Barangaroo catered exclusively to high rollers. A statement from Crown has also been included.
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