Australia’s Crown Resorts could be entitled to receive billions of dollars in compensation from the New South Wales state government should an inquiry into its suitability to hold a casino license prevent the company from dealing with Asian junkets.
According to a report in The Sydney Morning Herald, a compensation clause is part of the original deal Crown signed with the NSW government in 2014 to develop and operate its AU$2.2 billion Crown Sydney project at Barangaroo on the Sydney Harbour foreshore.
The deal stipulates that Crown can claim compensation of 10.5 times the estimated negative financial impact brought about by “any action” from the state government that changes or has the effect of changing its casino license. Those changes relate to negative impacts on the company’s “assets, liabilities, properties … operating results, operations, reputation or prospects,” the SMH reports.
Crown would not be liable for compensation if the Independent Liquor & Gaming Authority (ILGA) terminated its casino license on disciplinary grounds, which could result from a decision by the inquiry that the company is not suitable to hold a license.
Any such compensation claim could in theory add up to billions, with Crown recently reporting VIP segment revenue of AU$398.2 million (US$290.6 million) for the year ended 30 June 2020. In the previous financial year, which was unaffected by COVID-19, VIP revenue was AU$513.4 million (US$374.6 million).
A decision on whether Crown is suitable or not is expected by 1 February 2021 and, should the decision go against the company, may include details of changes that need to be made to become a suitable holder.
Ironically, Crown Sydney is scheduled to open its doors by December and before any such decision is handed down, with an ILGA spokesman telling the SMH, “Crown Resorts has a valid license to operate a restricted gaming facility at its Barangaroo site.”