The Casinos industry in Australia has endured a difficult period due to trading restrictions that have accompanied lockdowns and international border closures in response to the COVID-19 pandemic. An anticipated rebound in domestic tourism and major projects and developments are offering the industry a brighter outlook for the future. However, the current Royal Commission into Crown Resorts Limited’s Melbourne operations adds insult to injury as the industry recovers from a challenging year through December 2020.
Crown Royal Commission
The Royal Commission into Crown Melbourne, which the Victorian Government recently extended to October 2021, has subjected the company to intense public and media scrutiny in light of the allegations that have emerged. According to the royal commission’s lead lawyer, the investigation has uncovered evidence of Crown Melbourne’s alleged engagement in illegal conduct, which was encouraged by a culture that prioritised profit over integrity. As a result, Crown Melbourne may be stripped of its casino license. The WA Government has also established a Royal Commission into Crown Perth, which is due to deliver its final report by March 2022.
The compounding accusations against the company, and the effects of the COVID-19 pandemic on its operations, were reflected in Crown Resorts’ 2020 Financial Year Results, which showed a 24.7% decrease in revenue (to $2.4 billion) and a NPAT of $79.5 million (−80.2%). The company’s revenue has declined over the last three financial years, but is expected to recover as COVID-19 restrictions are eased.
The COVID-19 pandemic
The trading restrictions introduced in response to the COVID-19 pandemic have been detrimental to Australia’s casinos and associated businesses such as hotels and resorts, which would have also taken a hit due to severely reduced tourism. Increased overseas competition from casinos in Asia will also pose a threat to the Australian casino industry as new casinos open overseas and local closures affect domestic operations.
Industry heavyweights
Crown Resorts (49.8% market share) and The Star Entertainment Group Limited (39.9%) both have a tight grip on competition within Australia’s Casinos industry, with the two companies occupying a combined 89.7% share of the industry’s revenue. A potential merger of the two heavyweights would further their dominance over the industry. Star Entertainment Group, which operates in Brisbane, the Gold Coast (QLD) and Sydney, also struggled last year under unfavourable operating conditions. The company’s 2020 Financial Year Results showed a 31.4% decrease in revenue ($1.5 billion) and a NPAT loss of $94.6 million (−147.8%). However, the company’s revenue is expected to rebound, bolstered by a hopeful improvement of COVID-19 restrictions and project expansions at Queen’s Wharf Brisbane and The Star Gold Coast.
IBISWorld reports used to develop this release:
Casinos in Australia
Hotels and Resorts in Australia
Crown Resorts Limited
The Star Entertainment Group Limited
