CEO promises Crown has “turned a corner” ahead of Sydney gaming launch

| By Nosa Omoigui
Crown Resorts CEO Steve McCann said he believes the company has turned a corner in 2021, following the implementation of major reforms after multiple investigations into the operator this year.
Crown targets 2022 for Sydney resort gaming debut

Crown says that “good progress” has been made on implementing the reforms outlined in the Bergin Report, which deemed the company unsuitable to operate a casino in Sydney’s Barangaroo region. These requirements included paying a AU$22.5m settlement to New South Wales Independent Liquor and Gaming Authority (ILGA).

Crown CEO Steve McCann said: “It’s fair to say that the reform programme was well and truly under way before I joined Crown, and we have invested a lot of time and effort since then to continue on that path. I firmly believe the business has turned a corner and has been materially de-risked over the last 6 months.

“We have seen significant progress on our remediation plan, we’ve had a significant overhaul of the senior leadership and board, we’ve had continued challenges through Covid-19 in terms of lockdown, but today we have all three resorts open and operating.”

Crown was also subject to an investigation from Victoria’s Royal Commission, which also deemed the operator unsuitable to operate a casino in the region. Meanwhile in Western Australia, an enquiry has been extended until March 2022 following a request from commissioners for more time to carry out their investigations.

Crown has developed a remediation plan to tackle the issues raised by various regulators. The plan focuses on key areas such as culture, responsible gaming, risk management, junkets, and VIP and significant players. In addition to an anti-money laundering and counter terrorist financing plan, a change to Crown’s senior management was also recommended.

2021 has seen Dr Ziggy Switkowski named as the company’s new chairman, Simon McGrath hired as chief executive of Crown Sydney, and Danielle Keighery appointed chief corporate affairs officer and brand officer.

McCann made the statement at Crown Sydney, which he said should be open for gaming activity in early 2022. The venue is currently open for non-gaming activities.

Crown attests that the resort’s two gaming areas are ready for opening on a staged basis, subject to a determination of suitability by ILGA.

The staged opening is dependent on current staffing levels, with Crown planning further recruitment for gaming related roles.

The two gaming areas expect to have 160 table games and 70 electronic table games in operation by the time the floors are open to the public.

The hotel portion of the resort has been operational since November, welcoming 1300 employees during the novel coronavirus (Covid-19) pandemic.

All three of Crown’s domestic venues – Perth, Sydney and Melbourne – have reopened in some capacity with mandatory vaccination policies in place for customers.

Compared to the second half of 2020, Melbourne experienced a 75% increase in main floor gaming revenue and a 65% increase in non-gaming revenue for the two week period that ended on 5 December, while Perth saw an 8% increase in gaming revenue and a 31% increase in non-gaming revenue.

Crown has seen an increase in revenue derived from domestic business since the start of the Covid-19 pandemic. 100% of revenue came from local customers in 2021, up from 87% in 2020. Revenue from the company’s VIP programme fell to 0% this year, down from 13% last year.

Crown has subsequently been the subject of a takeover proposal from private equity firm Blackstone, who values the company at approximately AU$8.46bn. Having rejected the offer due to a lack of compelling value, Crown has since invited Blackstone to make another proposal.

On the Blackstone bid, McCann added: “We do now have an offer. We’ve made it clear that we don’t think that the offer is compelling value. We’ll be looking at every alternative to try and maximise value, but the very first step is getting open in Sydney and making sure the market can see the value of these fantastic assets and get trading up post pandemic.”