Crown Melbourne Close to Losing Casino Licence
Much of the world is enjoying some time off work during the festive period. Executives at Crown Resorts go into the holidays fearing the worst for Crown Melbourne as it faces a very real possibility of losing its casino licence.
2020 has been extremely unpredictable. We have the COVID-19 virus to thank for that. Crown being in the headlines surrounded by negativity is the only constant in an otherwise crazy year.
Matters look to be getting worse with several reports suggesting Crown is set to lose its casino licence at its Melbourne property. This will be disastrous if it happens.
There are serious doubts about Crown receiving a casino licence for its Barangaroo, Sydney project. Crown hoped to fully open the $2.2 billion development in December but that never happened.
The company received an interim liquor licence ahead of a proposed December 28 opening. This means patrons can purchase alcohol in the Sydney hotel, bars, and restaurants. The licence is short-term, however, because it expires on April 30, 2021. The limited-time licence shows authorities do not trust Crown one iota.
Casino Licence Review Brought Forward
NSW Independent Liquor and Gaming Authority are the main reason Crown Sydney isn’t fully opening. It made an 11th-hour submission to the Bergin inquiry about criminal laundering money at Crown Melbourne.
The ILGA, who issued the temporary liquor licence, is holding off awarding a casino licence until February. This is when the findings of the inquiry are made public.
Philip Crawford is the Chairman of the ILGA. He explained the decision to not award a casino licence to Crown Sydney.
“Last month, ILGA decided against approving a range of regulatory items related to the casino’s gaming activities prior to the release of the Bergin inquiry’s findings in February 2021,” Crawford said.
“At the time, ILGA agreed to work with Crown Resorts to enable opening this month of all non-gaming areas including accommodation, restaurants, bars and entertainment areas.”
Crown Review Brought Forward
Not having a casino licence could be the reason for ILGA’s decision to issue only a temporary liquor licence. Victorian Gaming Minister Melissa Horne is concerned about the evidence of criminal activity at Crown Melbourne.
Casinos undergo a review process every five years. Crown Melbourne last had a review in 2018, meaning 2023 is the next one due. This is taking place in 2021 and the possibility of losing its casino licence is very real.
Investment Firm Reduces Crown Stake
Crown announced this week that a major shareholder reduced its holding in the controversial company. Perpetual Ltd held 63.2 million shares in Crown but reduced this to 55.4 million. This takes Perpetual’s holding down from 9.33% to 8.19%.
The sale reignites rumours of Blackstone Group taking over Crown Resorts. Blackstone already holds 10% of Crown’s stock after purchasing 67,675,000 shares in March 2020. Blackstone couldn’t help itself when Melco Resorts offered its holding to Blackstone for $8.15 per share. Melco paid James Packer $13 per share for the same stock only months earlier.
Losing its casino licence will result in Crown’s share price plummeting. What good is a casino if it cannot operate as a casino? A lower share price means less funds are required for a full takeover.
Furthermore, it’s likely the inquiry will rule an overhaul of Crown’s senior management team is required to renew its casino licence. This makes a perfect storm for Blackstone who can sweep in with its own team.
The fact Blackstone applied to the NEW gaming regulator for permission to increase its Crown holdings in October only adds fuel to the fire. It is extremely unlikely the regulator will object in light of current events.