James Packer’s Crown Resorts has won a sweetened deal for its Melbourne casino from the Victorian government in return for up to $910 million.
Casinos operator Crown Resorts has fortified its position in Australia by winning a sweetened deal for its Melbourne casino from the Victorian government.
Crown has won an extension of its Melbourne casino licence, an increase to the number of table games and poker machines, and will pay less tax on VIP gaming.
In return for the amendments to its casino licence and management agreement, Crown will make extra payments to the Victorian government of up to $910 million.
Crown said the reforms would allow its Melbourne casino to compete more effectively with interstate and overseas casinos, boost tourism and create new jobs.
Chairman James Packer said Crown will have invested $1.7 billion in the 10 years to 2016 on upgrades of its Melbourne casino resort.
“Despite this investment, Crown has for a long time been at a major competitive disadvantage on the issue of taxation,” Mr Packer said.
“Now, with the support of the Victorian government, we will have a licence that enables us to compete on a level playing field to help drive tourism, jobs and economic benefit for the state.”
Victorian Treasurer Michael O’Brien said the new deal would boost jobs, investment and tourism while improving Crown’s operations and market share.
“This is a very competitive industry,” Mr O’Brien said.
“We want to ensure that high rollers from overseas (VIP gamblers) find a reason to want to come to Melbourne to spend their money.”
Australian Churches Gambling Taskforce chair Reverend Tim Costello says the agreement between Crown and the Victorian government was grubby and shameless.
“Grubby, because James Packer has really fleeced the Australian public, and when Minister O’Brien says it’s a win-win, it’s a win for the Liberal Party now going cashed up into an election,” he told AAP.
Morningstar analyst Brian Han said the revised Melbourne casino arrangements were unequivocally good for Crown.
The increase in the number of gaming tables, automated table games terminals, and poker machines would generate more money for Crown.
Most of the payments to be made to the Victorian government would be staggered over the next decade and some of them depended on the performance of the casino.
“When you work all that out, I think the benefits certainly outweigh the costs,” Mr Han said.
“More strategically, though, it really comforts people about the earnings power of this company now that they have extended the casino’s term by 17 years.”
Mr Han said the scrapping of the super tax on VIP gambling would help Crown’s Melbourne casino compete with the big, luxury casino resorts of Macau and Singapore.
The new arrangements would also help Crown’s existing or proposed expansion projects in Sydney, Brisbane, Macau, Las Vegas, The Philippines and Sri Lanka.
Crown shares gained 20 cents, or 1.25 per cent, to $16.18.
CROWN’S NEW DEAL AT MELBOURNE CASINO
* Licence extended by a further 17 years to 2050
* “Super tax” on international VIP gambling removed from 2015
* Increase in gaming tables from 400 to 440
* Automated table games terminals up from 200 to 250
* Poker machines up from 2,500 to 2,628
* $250m once new licence and management agreement effective
* $100m in 2023 if Melbourne casino annual revenue rises more than four pct from 2014 to 2022
* Extra $100m if revenue grows by more than 4.7 pct
* $250m in 2033
* At least $35m a year over six years in gaming taxes linked to new gaming products, from 2016