GGRAsia – Crown Melbourne reaches deal for licence extension

Crown Melbourne reaches deal for licence extension

Aug 22, 2014 Newsdesk Latest News, Top of the deck, World

Australia’s Crown Resorts Ltd on Friday announced it had reached a deal with the Victorian government to extend the expiry date of the Crown Melbourne casino resort (pictured) gaming licence from 2033 to 2050.

The extension is part of a wider number of reforms “which will improve the competitiveness of the Crown Melbourne integrated resort as a tourism destination compared to other integrated resorts in Australia and Asia,” the company said in a filing to the Australian Securities Exchange.

Crown, headed by Australian billionaire James Packer, is one of the two controlling shareholders of Macau-based gaming operator Melco Crown Entertainment Ltd. The other is Melco International Development Ltd, controlled by Lawrence Ho Yau Lung.

The new agreement still needs legislation amendments to be approved by the Victorian Parliament and changes to the casino licence to be okayed by the Victorian Commission for Gambling and Liquor Regulation.

The current coalition government does not control the parliament. That may raise issues in getting the deal passed. There is a general election scheduled for November 29.

The package of reforms agreed between Crown and the Victorian government include the removal of the super tax on commission-based play for international and interstate VIP players from next year. The state applies a base tax of 9 percent of gross revenue for these players, plus a super tax that can go up to 12.25 percent depending on revenue.

The changes will also entitle the company to increase the number of table games at Crown Melbourne by 40, to 440 – plus 100 existing poker tables.

Crown Melbourne will in addition be authorised to increase by 50 the number of fully automated table game terminals, from 200 to 250. The property will also be able to increase by 128 – from 2,500 to 2,628 – the number of gaming machines it can operate.

‘Win-win outcome’

The new agreement between Crown Melbourne and the Victorian government obliges Crown to make a series of additional payments to the state amounting up to AUD910 million (US$847 million) depending on the casino’s performance, by way of lump sum payments, instalments and additional tax revenue.

Crown and the Victorian government have also agreed that the previously proposed gaming machine levy will not apply to Crown Melbourne.

Both parties have confirmed that, unless Crown consents, casino taxes will not be increased and the casino licence will not be amended, the firm stated.

“This greater regulatory certainty will allow Crown to continue to invest in and increase employment at Crown Melbourne,” the company said.

“In the 10 years to 2016 we will have invested AUD1.7 billion to upgrade the Crown Melbourne integrated resort to make sure we remain competitive with the best integrated resorts in the world,” Mr Packer was quoted as saying.

He added: “Despite this investment, Crown has for a long time been at a major competitive disadvantage on the issue of taxation. Now, with the support of the Victorian government, we will have a licence that enables us to compete on a level playing field to help drive tourism, jobs and economic benefit for the state.”

Victorian government treasurer Michael O’Brien said the new agreement would support ongoing investment and jobs for the state.

“This agreement provides significant financial benefits to the state, as well as improved competitiveness and investment certainty for Crown and the 8,800 people who work there,” Mr O’Brien said in an official statement.

“This is a win-win outcome. It is good for jobs, good for tourism and good for investment,” he added.