Australian casino operator Crown Resorts Ltd must pay the Victorian state government in its home base Melbourne AUD250 million (US$217.7 million) within seven days, the firm announced on Monday in a filing to the Australian Stock Exchange.
The money is in recognition of a 17-year extension on Crown Melbourne’s (pictured) casino licence that was announced in August and confirmed by the Victorian parliament in mid-October.
As part of the deal, the Crown Melbourne licence will run until 2050. A so-called ‘super tax’ on gambling by international and interstate VIP players will also be removed from financial year 2015.
The firm – which is a joint venture investor in the Macau and Philippines casino markets via Melco Crown Entertainment Ltd – will also be allowed extra live dealer tables, electronic tables and slot machines under the deal with the Victorian authorities.
The new rules will allow Crown Melbourne up to 40 new table games (from 400 to 440); 50 more fully automated table game terminals (from 200 to 250); and 128 more gaming machines (from 2,500 to 2,628) within a state-wide permitted maximum of 30,000 gaming machines.
The new agreement obliges the casino operator to make a series of additional payments to the state amounting up to AUD910 million depending on the casino’s performance, by way of lump sum payments, instalments and additional tax revenue.
Crown Resorts said in a statement: “The reforms will help boost Victorian state tourism and create new jobs as they will allow Crown Melbourne to compete more effectively in interstate and international markets. Victorian taxpayers will also benefit from a substantial upfront licence payment to be made to Crown.”
Negotiations between Crown Resorts and the Victorian government began in December 2013 after a new slot machine tax – which represented a cost to Crown Resorts of approximately AUD50 million a year – was announced as part of the mid-year budget review.
Crown Resorts’ group-wide profit grew by 65.7 percent year-on-year to AUD656 million for the year ended June 30, with strong growth from its Macau joint venture helping offset the flat performance in Australia.
But Crown Resorts chairman James Packer sounded a note of caution about Macau at Crown’s annual general meeting on October 16.
The joint venture’s Philippines resort, City of Dreams Manila could have a first phase opening before year-end, but no confirmation of a date has been made so far.
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"We forecast Grand Lisboa Palace will have EBITDA of HKD2.0 billion (US$260 million) with 330 tables by 2022, and HKD3.5 billion with 380 tables by 2023"
Credit rating agency Fitch Ratings