Star Entertainment is no longer entertaining the idea of a Crown Resorts takeover. On paper dubbed a merger, any action by Star to integrate Crown’s operations into its own would have put the latter’s brass on notice that their days were numbered. However, seeing that Crown continues to face more scrutiny across Australia and may lose another gaming license in the country, Star has decided that it is better, for now, to step away and let the saga play out before making a move.
Star Steps Away From Crown Merger
Star began talking to Crown brass a couple of months ago about a potential merger after Oaktree Capital Group and the Blackstone Group showed interest. At the time, Star was willing to open the wallet and do almost anything necessary to consummate the marriage of Australia’s two largest hospitality companies. However, it has had a change of heart, explaining that “issues raised at Victoria’s Royal Commission into Crown Melbourne have the potential to materially impact the value of Crown, including whether it retains the license to operate its Melbourne casino or the conditions under which its license is retained.” In simple terms, and without having expressly stated it as a reason, the potential loss of a license in Victoria would lower Crown’s value, which means Star could offer a deal for a lot less money. Crown has already lost its status in New South Wales (NSW) as a viable casino operator.
According to Peter Cohen, the former CEO and Executive Commissioner of Victoria’s state gaming regulator, things aren’t looking good for Crown in Victoria. Speaking with Inside Asian Gaming, he indicated that it isn’t very likely that the embattled company will stay alive in the Australian state, asserting that there is only a 33% chance that it will retain its license. He added that, if it does continue, it will be with “some conditions” put in place. He added, “Regulators generally work on the idea of trying to get a person’s attention – you start lower and increase to get their attention. If the Bergin inquiry is their second chance, I think we found out from the Royal Commission that Crown didn’t really get the message.”
Additional Trouble Ahead for Crown
Not only is Crown having problems in NSW and Victoria, but the state of Western Australia (WA) is scrutinizing the company, as well. There, however, things are a little more complicated, as the state can’t even keep its gaming regulatory body in proper shape. The Perth Casino Royal Commission (PCRC), according to Australian media outlet ABC, won’t be able to count on much support from the Gaming and Wagering Commission (GWC) as it investigates Crown’s ability to continue with a license for the operator’s Crown Perth resort, because the GWC is now on its third chief casino officer in five months.
The PCRC is scheduled to meet again next week to discuss Crown and Crown Perth, but the GWC hasn’t been able to compile the data and documents that have been requested amid the continuous executive departures. However, given Crown’s track record in NSW and Victoria, there isn’t much reason to believe its operational integrity in WA is any more solid. This might make it easier for WA to move forward with its decision, despite not having all the documents in order.