- »The Star Secures Sydney Slots Monopoly for 21 Years
The Star Secures Sydney Slots Monopoly for 21 Years
Star Entertainment Group scored a huge win for its Sydney property this week. It secured a 20-year tax agreement with the New South Wales government for it’s The Star Sydney to be the only casino in the city with gaming machines.
On top of Star Entertainment Group recently securing more funding for its Queens Wharf Brisbane project, the company is having a better recovery from the coronavirus pandemic than expected.
A Big Deal
As June began, casinos and all types of entertainment venues began a very slow process of reopening or put their reopening plans into place. After more than two months of mandatory shutdowns, everyone from employees to operators were anxious to resume work.
Star Entertainment Group took one of the toughest hits of the shutdown period. As a result, it stood down approximately 90% of its employees. (Later reports put that number above 95% and totaled approximately 9,000 employees.) The company called it one of the most “painful decisions our senior management is ever likely to encounter.”
However, in May, there were some rays of light. Government and health officials allowed numerous businesses to begin reopening. And as they did, there was no spike in Covid-19 cases, allowing the reopening process to continue.
On May 30, Star announced that The Star Sydney planned to continue its expansion as of June 1. The cautious and limited opening of restaurants opened the doors for more options under a new operating model. Those were:
- Food and beverage outlets opening for up to 50 people each
- Bookings restricted only to invited members from The Star loyalty program
- Diners able to access gaming facilities, no public access to casino floor yet
- Hotel accommodations opening further
This all gave the company the ability to increase its workforce to approximately 1,000 employees in Sydney. And CEO Matt Bekier said he welcomed the easing of restrictions in New South Wales and working to expand opportunities moving forward.
Even so, the volume of business in the foreseeable future will remain “significantly below normal levels,” said Bekier. “We are focused on conservatively managing the business to provide us with the confidence for the next stage of returning our properties to more normal conditions as restrictions unwind.”
All the Slots
The Star Entertainment Group announced more news this week, that in the form of a 20-year tax agreement with the NSW government.
Of the two casinos in Sydney – Crown and The Star – only the latter will be able to gaming machines or pokies. Crown Resorts had previously noted that it did not plan to offer slots, as its VIP-heavy clientele plays more table games, but this Star deal solidified it.
The Star announced the deal that will run through June 30, 2041. The Star Sydney will be the exclusive casino provider of EGMs (electronic gaming machines) in the Sydney market. Any violation of this agreement by Crown will require Crown to pay financial compensation to the NSW government.
The details of the deal allow The Star Sydney to offer up to 1,500 machines, and there is no cap on the number of multi-terminal gaming machines or tables. There is also no limit on jackpots and prizes. And all gambling options may operate 24 hours a day, seven days a week. All of this begins in 2022.
Further, The Stars will begin following the same tax regime as Crown Sydney to pay a flat tax of 29% on table game revenue. The Star will then pay a 32% tax for the first three years of gaming machines, after which it rises gradually to 34% for the last 14 years of the deal.
In addition, the agreement solidifies a relationship between the NSW government and The Star, according to the Financial Review. This may benefit the company for changes in the permitted number of games and pokies, etc., in the future.
Stocks on the Rise
The Star Entertainment Group wants to put its low point for its shares in the past. That low of $1.565 hit on March 25, just after all properties closed for the coronavirus pandemic preventions.
In the weeks after, stocks began their comeback. By April 1, they were up to $2.27, and they hit $3.27 on April 30. May was a bit of a roller coaster, but the climb has been mostly steady since mid-May. Recent news pushed stocks even higher, as they closed this week at $3.28.
Financial Review interviewed Macquarie analyst David Fabris, who has chosen to keep The Stars as his top pick of the Australian casino market. He noted that he expects the company’s earnings to recover back to 2019 levels over the next three years “supported by exclusive licenses/products and a habitual customer base.”