Fitch downgrades Crown’s outlook after probe

The agency expects Crown's revenue to return to pre-covid levels by 2023.
The agency expects Crown's revenue to return to pre-covid levels by 2023.

The ratings agency does not believe the operator will lose its casino licence but could suffer heavy fines and penalties.

Australia.- Fitch Ratings has revised its outlook for Crown Resorts to “negative” after its executives’ appearances at a hearing conducted by the New South Wales Independent Liquor & Gaming Authority.  

Fitch said Crown Resort’s “BBB” Long-Term Issuer Default Rating (IDR) was revised from “stable” to “negative” due to the possible fallout from the regulatory inquiry plus new inquiries opened by Victoria’s regulator and by the financial crimes agency, AUSTRAC.

Fitch said that the outlook “reflects weaknesses in Crown’s governance structure that were revealed during an inquiry in New South Wales, as well as the risks to Crown’s operations and financial profile from potential outcomes of the various inquiries, which could include fines, changes in operating conditions and regulations, or changes to or loss of licences.” 

The NSW inquiry is to determine if the operator is fit to keep its licence for the Sydney casino that it is preparing to inaugurate in December.  

Fitch warned that it did not rule out downgrading Crown’s IDR if the firm fails to correct weaknesses or if regulators impose “onerous regulatory conditions or fines or penalties that have a significant impact on the company’s business or financial profile.”  

It said the group’s financial position would allow it to absorb around AU$800 million (US$570 million) in fines and penalties, and said: “It would be among the largest fines imposed on a corporate in Australia.”  

Regarding the possibility of Crown losing its casino licence, it said: “We believe there is low probability of this event, and hence have captured the risks under the negative outlook.” 

Fitch estimates a revenue decline of 30 per cent for the full year 2021 due to pandemic-related restrictions but predicts revenue will double year-on-year in 2022, with a return to pre-covid levels by the following year.   

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