Crown Employee Arrests Threaten Barangaroo Business Model

The business model for James Packer’s Crown Resorts Barangaroo development may be under threat after the arrest of eighteen Crown employees in China last week. The arrests are being linked to a crackdown by the government in mainland China where it is illegal to gamble or promote gambling activities.

Crown Resorts has been planning a six-star luxury hotel and casino resort to compete with The Star Casino across the harbour. The $2 billion complex with its VIP-only casino has been planned with no poker machines; however, with the arrests in China last week, there are fears that the Chinese high-roller gambling business, on which this casino model is based, has collapsed as analysts believe that the arrests may deter high-roller Chinese gamblers from visiting Sydney casinos.

New South Wales Premier, Mike Baird, has said that despite these developments, he would not reconsider allowing poker machines to operate at the new casino in Sydney.

In 2013, legislation was passed to allow the Barangaroo casino to operate an unlimited number of table games, but no poker machines. Parliament would need to change this legislation to allow pokies to operate; however, Mr Baird ruled this out as a possibility.

“There will be no poker machines at Crown Sydney,” stated a spokesman for Mr Baird to Fairfax News.

“The approval is for a six-star hotel, with a VIP gaming facility for members and guests. There will be no general public access, no low-limit gaming and no poker machines.”

With markets reportedly pricing in a 70 percent drop in international high roller gambling at Crown’s Australian casinos, the viability of Barangaroo may rest on Packer’s ability to persuade the government to change its legislation and grant it a license to operate poker machines after all.