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For years now, it has been one bad news story after another for Crown Casino in Melbourne. However, recent news is painting what could be a much brighter future for the beleaguered casino. According to reports, Blackstone is looking to invest significant capital into the casino in attempts to re-establish the casino as one of the premier gambling destinations in the world.
The Blackstone Group purchased Crown Resorts in 2022 for $8.9 billion, or approximately $13.10 per share of the company. Before the takeover, Blackstone held 9.99% of the company’s shares. Since that time, the company has merely managed the casino without committing significant resources into the casino. That will soon change.
Blackstone President Jon Gray recently visited Australia and in an interview with The Australian, spoke on his desire to transform Crown Melbourne into one of the world’s top casinos. He states, “We want to be a best-in-class entertainment company and hotel business. We understand that there was a lot that wasn’t done right, and we’ve got to come in here and operate at the highest standard, the highest standard from a compliance standpoint, but then make them as attractive as possible to customers.”
Gray states that the company is looking to make significant investments to bolster Crown as a casino and a hotel. He continued stating that the company was given a two-year time frame to improve both the casino and hotel. He believes the company is reaching those goals.
Some are beginning to compare Blackstone’s potential transformation of Crown Resorts to that of The Cosmopolitan in Las Vegas. The company purchased the Vegas casino in 2014 for US $1.7 billion and sold it in 2021 for US $5.65 billion. This was after significant investments in the property.
While this is the type of transformation you would expect Blackstone to pull off, considering its history, the scenarios are entirely different. In the case of The Cosmopolitan, Blackstone only had to revamp a casino still in good standing with regulators. It was a matter of rehabilitating the property and making it more attractive than other competitors in the region.
The Crown Resort scenario presents additional challenges. For starters, Blackstone has to prove to regulators that the casino can operate honestly and adhere to all new regulations put into place. Then it has to change the public perception of the casino. It also has to find a way to regain customers lost to Australian online casinos, thanks partly to the pandemic.
Even if Blackstone can accomplish this, they still need to find a willing buyer for the property. In The Cosmopolitan’s case, plenty of companies lined up to either enter or expand their presence in the Las Vegas market. Australia doesn’t have the same amount of gambling tourism as Las Vegas, thus reducing the potential suitors for the property.
Also, if you look at the deal, much of the money from the Cosmopolitan sale comes from a long-term lease of the physical property. One has to wonder if a company will be willing to put up a 30-year commitment to Crown Resorts.
Gray described Crown Melbourne as a unique asset with a lot of potential. He stated, “Melbourne is a physical turnaround story and our objective would be to invest significant capital there and enhance the asset, which we think will be great for the community and great for tourism there as well.”
What this means is that a lot of positive changes are coming to the Crown in the near future. An influx of money will ultimately result in additional jobs in the short term as the casino works to improve. It also means more job security for the long term as the casino looks to make it a world-class destination. After years of seemingly never-ending negative press about the casino, it is great to see a potentially brighter future for one of Australia’s top live casinos.