Crown Resorts barrels toward a $1bn loss after difficult year

The casino operator, acquired by private equity group Blackstone in a $8.9bn deal, has been dealing with regulatory issues and pandemic-related closures.

Blackstone has installed former Wynn and Sands executive Ciaran Carruthers to oversee Crown Resorts. Picture: Andrew Henshaw

Crown Resorts, the country’s largest casino operator, has posted a near $1bn loss as it sets aside more than $600m to pay for fines levied by gaming regulators.

In its last year of public ownership, the company has posted revenues of $1.94bn, up from the $1.54bn in the previous financial year. But expenses have blown out from $1.98bn in the year to June 30, 2021 to $3.09bn. That figure includes $617m set aside for regulatory and other related matters, accounts lodged with the corporate regulator show.

The company posted a net loss of $945.4m, compared to a $261.3m loss in 2021.

A Crown spokeswoman said the figures reflected a “challenging environment faced by Crown during the pandemic, with significant impact on our operations, particularly in the first half”.

“During the year, Crown also navigated significant regulatory matters. These matters are ongoing, and we continue to co-operate with the relevant parties on resolutions,” she said. “Under the new Crown leadership, we are progressing the important work on our reform and remediation plan and cultural transformation as we work towards our ambition to be a world leader in the delivery of safe and responsible gaming and entertainment.”

Crown’s shareholders – including its major investor James Packer – late in May overwhelmingly approved the $8.9bn sale of the company to Blackstone.

But the company has been beset by regulatory woes following damning findings of separate inquiries in Victoria, NSW and Western Australia which stymied Crown’s attempts to open its new gaming floor at its Sydney casino and led to a series of large fines.

The NSW inquiry was established after Mr Packer’s Consolidated Press Holdings agreed in 2019 to sell a 19.9 per cent stake in the company to Melco Resorts, a company associated with Stanley Ho, a businessman with alleged links to criminal organisations. The inquiry last year concluded Crown was not suitable to hold a licence to operate a casino in Sydney. The NSW Independent Liquor & Gaming Authority – now the Independent Casino Commission – in June granted a licence to operate the gaming floor under strict conditions.

Earlier this month, Crown was fined $120m from Victoria’s casino regulator over a 12-year spree of flouting its responsible gambling obligations – including providing patrons with devices to gamble non-stop for days.

The penalty – the equivalent of $10m a year – is on top of the $80m fine that the Victorian Gambling and Casino Control Commission slapped on Crown after it disguised gambling transactions on China UnionPay debit cards as hotel charges.

The company has until early 2024 to prove that it is fit to hold a Victorian casino licence.

The accounts show revenues at Crown Melbourne rose from $567.5m to $923.8m in the year, while those in Perth fell from $740.9 to $731.7. In Sydney, revenues rose from $68.4m to $113m, with gaming unable to operate until the new financial year.

The accounts, lodged with the Australian Securities and Investments Commission, note the Covid-19 pandemic “continued to have a significant impact on business performance throughout the 2022 financial year”. “During mandated closure periods, whilst Crown did not generate any gaming revenues, Crown continued to incur expenses to maintain its operations and corporate responsibilities,” the company said.

Blackstone recruited ex-Wynn and Sands executive Ciaran Carruthers as Crown’s new boss. He replaced Steve McCann in early September. Other changes have included the installation of former Las Vegas Cosmopolitan executive Bill McBeath as chairman and Mark McWhinnie – a former senior executive at Sands China – as chief executive of Crown Sydney.

Crown still faces a class action brought by Maurice Blackburn. It claims the company, then listed on the ASX, had inadequate processes in place to ensure it did not breach anti-money laundering regulations. The outcome would not be material, the accounts say.