Fitch Ratings says Crown Sydney’s return on investment will be slower than initially expected due to the loss of the Chinese VIP market and competition from The Star for the premium mass market.<\/p>\n\n\n\n\n\n\n\n
Australia.- In a new report titled \u201cWhat Investors Need to Know: Australian Gaming,”<\/strong> Fitch Ratings says Crown Sydney\u2019s return on investment will be slower than expected.<\/p>\n\n\n\n According to analysts, the loss of the Chinese VIP market <\/strong>and competition from The Star Sydney, which already offers mass premium gaming in Sydney\u2019s Barangaroo district, will cause slow returns for Crown Sydney.<\/strong><\/p>\n\n\n\n They said: “This market is already serviced by The Star in Sydney and, while the new offering may attract players and increase the market size in Sydney<\/strong>, we do not believe any potential step-up will be enough to see both casinos operate without some cannibalisation of revenue.”<\/p>\n\n\n\n Crown Resorts\u2019 Barangaroo casino licence<\/strong>\u00a0is still on hold after the ILGA’s inquiry in February found Crown to be\u00a0\u201cquite unsuitable\u201d to hold a licence<\/strong>\u00a0for the new casino. Non-gaming facilities at the property have opened, with a\u00a0liquor licence<\/a>\u00a0<\/strong>now extended until October 2021.<\/p>\n\n\n\n In May, the ILGA said that if\u00a0Crown Resorts<\/a>\u00a0continues taking steps to address the findings of the ILGA\u2019s inquiry into the operator, it may be able to retain its gaming licence and open its casino at its venue in Sydney\u2019s Barangaroo district by October.<\/p>\n\n\n\n However, when it’s finally granted, the licence is due to allow the casino operator to generate revenue from VIP and premium players only, so it cannot run slot machines, which are the main revenue driver for Australian casinos<\/p>\n\n\n\n Crown must pay\u00a0AU$12.5m to cover the cost of the ILGA inquiry\u00a0<\/strong>and must pay an annual Casino Supervisory Levy of AU$5m for fiscal years 2021 and 2022.<\/p>\n\n\n\n Crown Resorts<\/a>\u00a0CEO\u00a0Steve McCann<\/a>\u00a0has met with The Star Entertainment CEO Matt Bekier to talk about a potential merger of the two casino operators.<\/p>\n\n\n\n In May, The Star Entertainment<\/a>\u00a0made an unsolicited non-binding offer of AU$12bn<\/strong>\u00a0(US$9.4bn)<\/strong>\u00a0for Crown Resorts.<\/p>\n\n\n\n Although more details of the virtual meeting have not been released, according to local media,\u00a0McCann may be willing to work on a deal\u00a0<\/strong>and may have asked Star to provide more details about its offer.<\/p>\n\n\n\nStar Entertainment and Crown Resorts possible merger<\/strong><\/h2>\n\n\n\n