Crown VIP won’t recover until 2025: analysts

Crown Resort’s lucrative VIP business in Melbourne and Perth will not return to pre-pandemic levels until 2025, equities analysts at Morningstar say.

A gaming suite at the Crown Casino at Barangaroo in Sydney. ‘We expect The Star will concede 20 per cent of its table revenue to Crown Sydney within three years of the latter’s operation and around 55 per cent of VIP share by fiscal 2025,’ says a Morningstar analyst.

Crown Resort’s lucrative VIP business in Melbourne and Perth will not return to pre-pandemic levels until 2025, with strict international border controls and more regulatory oversight of junket operators slowing the recovery, equities analysts at Morningstar say.

In a note to clients, the research house’s Angus Hewitt also estimated there was a 50 per cent chance that Blackstone’s $8.89bn bid for the James Packer-backed gaming group, made public on Thursday, would proceed.

“Coronavirus-induced shutdowns of most of the firm’s venues (including an extended shutdown of its core Crown Melbourne asset) have weighed heavily on earnings since late fiscal 2020, and we expect the pain will be felt into fiscal 2022,” Mr Hewitt wrote.

Morningstar predicts that Crown’s Melbourne and Perth businesses, aside from VIP gaming, will return to pre-pandemic levels by 2023 “as border restrictions ease and social distancing requirements allow looser capacity constraints”.

The NSW casino regulator, the Independent Liquor & Gaming Authority, is expected to approve Crown’s Sydney gaming licence early this year.

The company’s Barangaroo operation has not been able to open its gaming floors after an ILGA inquiry found serious shortcomings in Crown’s governance arrangements.

“We expect Crown Sydney will begin to capture share from The Star almost immediately,” Mr Hewitt wrote of the company’s competitor.

“We expect The Star will concede 20 per cent of its table revenue to Crown Sydney within three years of the latter’s operation and around 55 per cent of VIP share by fiscal 2025.

“We also expect the introduction of a competitor will necessitate improvement in the offering of both players, and grow the Sydney VIP and premium gaming markets as a whole.”