Crown Resorts recorded a $199 million loss last financial year as the cost of remediation, financial penalties and improved compliance measures at its casinos combined with the cost of living crunch to wipe out its profits for a third year in a row.
The result —revealed in documents uploaded to the financial regulator late on Wednesday — is a significant improvement on the near $1 billion loss in the COVID-19-affected year prior, when the Blackstone-owned casino giant was hit with multiple financial penalties and undertook an expensive compliance overhaul following historic anti-money laundering and counterterrorism failings.
A Crown spokesperson said the result was reflective of the broader challenges the hospitality industry faced.
“During the year, Crown has made considerable progress on its remediation and transformation plan, which has resulted in a significant uplift to the operations and culture of the business,” she said.
Crown’s financial report showed it generated $2.7 billion in revenue over the financial year ending in July across its casinos in Melbourne, Sydney and Perth, as well as its private London members’ club and digital arm, a 44 per cent improvement on 2022. But a hefty $3 billion in expenses pushed it into the red.
“During the 2023 financial year, Crown continued to face challenges in relation to regulatory matters, with independent monitors at each of the Australian properties overseeing the gaming operations,” the company said in the report.
Crown Melbourne generated $1.4 billion in revenue over the period, a significant increase on the COVID-19 affected year prior, where its flagship premises made just $939 million.
Crown Perth’s revenue increased by 16 per cent to $854 million.
Sales at Crown Sydney — which opened its gaming floors in August 2022 — increased by 139 per cent to $271 million when including the contributions from the Barangaroo tower’s tenants.
Crown’s Barangaroo casino was forced to close one of its two gaming floors and axe 95 jobs in August, just one year into operations due to insufficient foot traffic.
The business said at the time the decision was motivated by “the current macroeconomic challenges facing our industry alongside other Australian businesses.”
Although revenue is up across its three casinos after the end of COVID-19 restrictions, sales across Crown’s assets remain down on what it reported before the pandemic, and below the expected traffic at the business. The whopping expenses bill accrued over the year is also reflective of the costs associated with resuming operations after COVID-19, as well as the additional resources needed to improve its compliance measures.
The company is preparing to pay one of the biggest financial penalties in Australian corporate history, with the Federal Court imposing a $450 million fine in July for the group’s anti-money laundering and counterterrorism failings at its casinos in Melbourne and Perth. This provision was made in the 2023 financial year.
Crown Sydney was the brainchild of former chairman and majority shareholder James Packer, who invested heavily in pitching the Barangaroo tower to Chinese high-rollers, who make up about 75 per cent of the global VIP gaming market.
Crown Sydney’s strategy has since shifted to place more emphasis on its integrated hospitality offerings, comprised of its luxury hotel and a string of restaurants.
The pivot followed a 2019 investigation by this masthead and 60 Minutes, which revealed Crown had been infiltrated by international criminal syndicates and money launderers. Since then, government inquiries in the three states where its casinos operate have ruled the company unfit to hold a casino license, and the findings stopped it from opening the high-roller casino at its newest $2.2 billion tower at Sydney’s Barangaroo as planned in late 2020.
Crown was forced to overhaul its board, management and procedures to satisfy the regulators, who approved a conditional licence for Crown to operate its Barangaroo casino last year. The conditional licence is valid until December 31.
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