Jun 25, 2021 Newsdesk Latest News, Top of the deck, World  
Fitch Ratings Inc says increased regulatory oversight in Australia “will be the main driver of structural change” in that country’s gaming sector, as casino operators there are “facing increased scrutiny” following a series of allegations in the media, and associated regulatory responses.
Australian casino operator Crown Resorts Ltd has reportedly committed itself to terminating junket operations and switching to cashless operations in its casinos, as part of a deal to restore gaming licensing for its new Sydney project at Barangaroo, in New South Wales. The company had been found unsuitable to run its new Sydney casino, following an inquiry into its fitness for a gaming licence in that state.
The company is also subject to royal commissions in the Victoria and Western Australia states.
Australia market rival The Star Entertainment Group Ltd has also agreed to end junket relationships, and to move towards cashless gaming, according to the New South Wales gaming regulator.
Australia’s large gaming operators, including New Zealand-based Skycity Entertainment Group Ltd, are also subject to formal enforcement investigations by Australia’s financial crime agency. All operators face the risk of fines and other sanctions, depending on the findings.
“We expect compliance costs for gaming operators to climb given the heightened scrutiny, which is likely to increase regulatory oversight and investment in compliance systems,” stated Fitch in its Friday report.
“Some elements of the operators’ businesses may also be forced to cease, which could dampen their overall revenue generation ability and margins,” wrote analysts Kelly Amato and James Hollamby.
But stricter regulations “are not the only source of change” facing the Australian gaming sector, suggested the institution.
“International border closures, rising tensions with China, restrictions on domestic gaming and bans on junkets have also significantly affected VIP business,” it said. “However, mass domestic play continues to demonstrate resilience, underpinning the sector’s strength.”
According to the ratings agency, VIP play “has been almost zero since Australia closed its international borders in March 2020.” The Fitch team said it does not expect VIP play in Australia to return “until border restrictions are relaxed – at this point, in mid-2022.”
The analysts added: “However, we believe tighter restrictions on money transfers out of China, rising China-Australia tensions and bans on junkets will see VIP play remain below pre-pandemic levels.”
Fitch also said it did not expect the possible sale of Crown Resorts “to change Australia’s gaming landscape,” apart from any regulatory benefits for the company.
Crown Resorts is currently the subject of a bidding war over the direction of the company. In May, Star Entertainment submitted a merger proposal, offering 2.68 of its own shares per Crown Resorts share. It said its proposal valued Crown Resorts shares above AUD14.00 (US$11.00), and would create a combined entity worth AUD12 billion.
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Matt Wilson
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