Star Entertainment Seeks More Gaming Machines in Sydney
The Sydney branch of multinational casino operator Star Entertainment has launched a bid with the local regulator for more gaming machines on-premises. There is a clear revenue incentive here for the operator as they seek to expand their offering. In the wake of COVID, casinos up and down the country have been trialing new promotions and developing new streams of revenue. Simply maximizing the gaming opportunities on its venue is the tactful approach Star Entertainment have opted for.
Star Entertainment are feeling rightly unfairly treated with the cap set on the amount of gaming machines in their casinos. The number is 1,500 which according to multiple reports is far less than Crown Resorts are permitted, prompting an appeal from Star Entertainment to the local regulators. ©stokpic/Pixabay
The pandemic has left many casino businesses in the lurch, with little to go after in terms of new customers and revenue. Under these conditions it’s no surprise that cash-strapped casinos are seeking to maximize the usage of their property space. Maximizing the return on available assets is a vital metric for measuring the competence of a management team, so the efforts being made here are far from surprising.
Announcing this week in a press release concerning their operational strategy and changes going forward, Star Entertainment confirmed that they will be contacting the New South Wales regulator to request the cap on gaming machines in their Sydney venue is increase. Raising this limit is ultimately a bureaucratic process that will need to be processed through the correct channels, but a decision will hopefully be communicated imminently.
Special restrictions that were imposed during the pandemic saw several casino businesses forced to re-evaluate the number of customers they were allowed on site at any given time. Moreover, there were restrictions on the number of machines that could remain active throughout the day, with a separation being required between each machine. With those days now in the past, attentions are turning towards re-invigorating the financial statements, whilst maximizing footfall and customer engagement.
Star Hoping to Capitalize on Crown’s Demise
In an industry as competitive as casinos, it wouldn’t come as a surprise to know that Star Entertainment are vying to capitalize on the embroiled Crown Resorts. James Packer’s Crown Resorts face money laundering charges, amongst other organizational disputes and corruption allegations. In this context, Star Entertainment doubling down on their efforts in Sydney can only be seen as one competitor seeking to grab a portion of the market share whilst their adversary is pre-occupied.
Crown Resorts future is completely uncertain in the current climate, the firm doesn’t yet have a proper grasp on its core business, and its upper management appear to be asleep at the wheel. The spiraling controversy has become a bit of a vortex with other organizations being pulled in. The Victoria regulator for instance, accused of turning a blind eye to the systemic problems at Crown and enabling the casino to carry on its nefarious activity largely unchecked.
All of this is coming to a head and will be resolved over the coming weeks and months. But for now, it’s worth just reminding you all the true motivations and driving forces behind the moves that Star Entertainment are making. This is not just about getting more return on their owned and operated assets, it’s about burying a competitor whilst they can, and ensuring the future financial prosperity of the company in this region.
Following the announcement from a regulator in the city that Crown is unsuitable to hold a casino license until it re-evaluates the culture at the firm and occupational constituents of its board, Star Entertainment clearly have the bit between their teeth. With the goal of becoming the biggest casino operator in Sydney, they have been handed a golden opportunity by the city’s regulatory body.
Star Argues Unfair Limit Set on Number of Gaming Machines
In all fairness the Star Entertainment, they raise a very good point regarding the limit applied on the number of gaming machines on their venue. The current limit set is 1,500 gaming machines on the premises, which according to the complaints logged towards the managing regulator, is far lower than the amount permitted at the Crown Resorts venue.
The Perth and Melbourne facilities for Crown Resorts are apparently permitted a much larger amount of gaming machines than the 1,500 that Star Entertainment are restricted. If this is in fact true, then the motivations for pursuing a regulatory change to the limit seem wholly justified. The difference this maximum limitation could make to the cash-flow of the company is clear.
Star Entertainment have launched an official appeal with the New South Wales government concerning this issue. Moreover, they will negotiate a series of settlements on their operating policies that will give them far more flexibility going into the new financial period. Whether the New South Wales will be receptive to their negotiation efforts is another issue entirely, but lawyers working for the casino remain optimistic their requests will receive a favorable settlement.
All of these market share power-grab dynamics are happening amidst the background of a takeover bid from Star Entertainment for Crown Resorts. However, in July 2021, Star officially withdrew their $6.5 billion buyout offer for Crown Resorts, leaving the situation very much open and unresolved.
