Next Moves for Crown Resorts in 2022
The embattled Australian casino has had quite a tumultuous last two years with all things considered. Cash flows have been far from optimal, and the chief executive has been constantly pursuing the wrong end of deals in an attempt to clear his name. Disassociating the brand image with the money laundering scandal has not been easy, and the regulatory heat applied to Crown left many wondering whether the company would ever be able to recover. Here we look ahead, now that the dust has settled, what is coming next for Crown Resorts.
The Australian regulatory commission for the national gambling sector has begun applying the pressure on the government to clean up its act and punish Crown financially. But with much of the complexity in this case now resolved, things are looking bright for the blue-chip casino. ©Squirrel_photos/Pixabay
When regulators were informed of serious irregularities in the balance sheet outgoings of a Melbourne brand for the Crown Resorts, a whole whirlwind of controversies and investigations was launched. What started as a breach of source of funds verification protocol quickly escalated into a heavy rap-sheet of allegations that Crown Resorts was intrinsically corrupt and wouldn’t be able to clean up its act in a way that could make them fit for market operational demands.
The gambling sector is one of the most ambiguous industries when it comes to specific regulator demands placed upon it, but with that there are a number of creative solutions that can be deployed in order to secure the best deal for all parties. Market research groups looking into the case have written of Crown’s resurgence, but the power of this brand is undeniable. With share-prices yo-yoing it remains unclear if this company can ever recover to the pre-conditions that enabled them to enjoy such profound success.
One of the key factors that will determine the next 12 months for Crown Resorts will be the reaction to James Packer’s personal liability lawsuit. If the chief executive’s influence on the course of action taken by Crown is seen as inherently absolute, then regulators will without doubt throw doubt into the ability for the organization to clean up its act. Fundamentally, it will come down to the ability for Crown to distance itself from the personal influence of its former CEO and prove beyond any doubt that they are fit to uphold the parameters of an Australian gambling license.
Crown Resorts Will Still Be Australia’s First Choice
Despite the barrage of negativity engulfing the casino since the end of 2019, there are glimmers of hope reverberating around the gambling industry in Australia. Share prices are an excellent benchmark for this perceived admirability of the casino, with operator stocks and trading volumes barely showing any sign of a decline since the second half of last year. This is encouraging and shows that the institutional investors around Asia and North America still view Crown as a leader in an increasingly competitive market.
The fundamental reach that Crown commands is another element that is difficult to sidestep from the perspective of longevity and market resilience. In real-estate, Crown Resorts are unmatched with their capitalisation. Huge properties across the biggest cities in Australia have enabled the casino to grow into one of the most powerful institutions in Oceania gambling. The brick-and-mortar recognition and trust placed in them by consumers is the major driving elements here.
Leveraging on their impressive balance sheet, Crown have been able to stack funds from a whole plethora of investors. The biggest of which was the fully funded and yet half-complete casino project in Barangaroo, Sydney. With this enormous project fears have been growing that Crown did not have the funds to see it through, this has been exacerbated over the past year as the tough and existential questions were put towards the company.
Despite the troubled situation on Crown’s doorstep, they now sit in an incredibly powerful position in the broader context of Australian gambling. Carrying a powerful brand, trust from their customers, and a line of potential investors willing to take a punt on the firm has allowed confidence to grow within the firm. Whether or not they will continue to drive growth and transform the shape of Australian gambling remains a question that the next management team and investors will try to resolve on their own terms.
