Australia’s casino future has no Packer or ‘whales’

The future of the casino business in Australia starts right now.

Actually, it started back in February 2020 when the virus flew out of Wuhan and the Chinese ‘whales’ – the high-rollers ‘happy’ to lose a million or four but never an eight - stopped doing so. Or rather, were stopped from arriving when the Morrison government closed the border. But like everything else through this time of Covid, we then spent the next two-and-half years rather chaotically trying to arrive at some sort of casino industry ‘future’.

By ‘we’, I mean those in and around Crown and around Star, regulators and operators all. There are a series of features which make ‘tomorrow’s’ casino business very different to the pre-Covid reality.

First and foremost, they might actually start obeying the rules set for their operations by the gaming regulators in the states they operate in and by AUSTRAC, our money-laundering regulator.

I should add, we might even see those mixed assorted regulators doing their jobs for the first time as well.

Australian billionaire businessman James Packer with his daughter Emmanuelle at their luxurious mansion in Cabo San Lucas, Mexico. Picture: Ana Badillo/The Australian

In all the scandals in an around Crown and Star – almost all related to high-rollers, because that’s where the (big) money is; or rather, was – it really did take two to tango. Casinos misbehaving and regulators being thoroughly incompetent.

We shall of course see: all sorts of punitive new rules have been imposed on Crown and Star, but regulators have still gotta regulate and I’ll believe that when it happens.

Their task – and, quite frankly, the ability of the casinos to obey the rules – will be made easier by the other biggest change.

The high rollers ain’t coming back; at least not anything remotely approaching the numbers and the dollars we saw in that distant, gone-for-ever, pre-Covid past.

We’ll get our first taste of the ‘new future’ in the Star numbers for the June half just finished. Crown doesn’t have to tell us now that it has disappeared into the Blackstone black box.

It’s both push and pull. They mostly won’t be getting on the planes in China; the casino won’t be trying to attract them with all the smooching we saw at the height of the Packer days and when Star tried to copy Melbourne.

It’ll be some time before we see another junket operator on Southbank or on the Harbour.

Now, in terms of profit, as opposed to revenue it won’t necessarily be a major loss.

In the December 2019 half – the 21st century version of 1913’s last superb Edwardian summer – Crown took in $177m from VIP revenue in Melbourne and Perth, some 11 per cent of total revenue.

Star got $154m from VIPs in its three casinos, the vast bulk in Sydney – 13 per cent of total revenue.

But to get that VIP revenue Crown splashed out $108m in the ‘smooching’ and Star an even bigger $121m. Net, the VIP dollars just weren’t that big.

In both cases almost all of it came from offshore Chinese high rollers. Revenues from local VIPs were and always have been, trivial.

This poses a big question for Blackstone: what on earth is it going to do with Barangaroo? Its licence is VIP-only.

I suggest it will become a non-gaming resort which Blackstone might keep or sell. There is now zero value in the gaming licence.

The third big change is that the casino business moves into a Packer-less future, after Packer domination from the start.

The late Kerry never played in either the Melbourne or Sydney casino, but backed his great mate Lloyd Williams in Crown from the get-go.

James never played in a casino anywhere; he’s entire world-view was built on ‘knowing the house-favoured numbers’.

The big question becomes: can they build their futures on the local physical punter in an ever-more digital 21st century.