Australia’s Gaming Industry Likely to Undergo Monumental Changes

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If any good is coming out of the debacle surrounding Crown Resorts in Australia, it’s that the country’s gaming regulations are likely to be tweaked. Fitch Ratings has weighed in on what is happening in Australia with Crown and Star Entertainment, as well as the gaming industry, in general, and believes that the screws are about to be tightened on gaming regulations. This might ultimately mean that casinos in the country will no longer expect to see runaway revenues.

Aussie Regulators to Crack Down on Casinos

Crown has been the subject of debate for several years following revelations that it may have tampered with gaming machines, enabled money laundering and allowed war criminals to gamble at its properties. It has already been blasted by authorities in New South Wales and is facing additional scrutiny in other states across the country. Although Crown and Star have already announced changes designed to show that they are taking a proactive role in cleaning up their operations, it took a monumental attack for the changes to occur.

As a result, and in an effort to keep the problems from being repeated, Australian gaming regulators are likely to implement stricter controls, according to Fitch. The firm explains that increased regulatory oversight is probably on its way, and that this will ultimately determine how strong Australia’s gaming market is. The oversight will result in “increased scrutiny” of the gaming industry as, across Australia and New Zealand, casino operators are put under the microscope by gaming and financial regulators. AUSTRAC, Australia’s financial watchdog, is also now conducting investigations of gaming operators across the territory.

Revenue Slides Likely for Operators

As a result of the increased attention to how they conduct their day-to-day business, casino operators could see reduced revenue margins. The reduction would be a result of both direct and indirect activity tied to oversight, with companies expected to be ordered to invest more in compliance and reduce some of their offerings. Fitch analysts Kelly Amato and James Hollamby add, “Some elements of the operators’ businesses may also be forced to cease, which could dampen their overall revenue generation ability and margins.”

The increased regulator involvement isn’t the only factor that is going to change Australia’s gaming landscape, though. The analysts point out, without forecasting how much of a difference there may be, that international border closing due to COVID-19, tensions with China and new money-movement restrictions will play a role in altering the revenue streams. The analysts add that VIP gaming has remained “almost zero” since March of last year because of border closures, and that it won’t rebound until the middle of next year. The good news, though, is that “mass domestic play continues to demonstrate resilience, underpinning the sector’s strength.”

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