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Gaming Report: The Star Entertainment Group Likely Australia’s Biggest Gambling Operator, Aquis Registers Poor Performance & More

The Star Entertainment and Aquis Entertainment Limited
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  • PG News August 25, 2018
  • 6 Mins Read

The world of gaming and gambling is rife with financial issues, legal grey areas and Australia seems to be at the heart of it.

From the revenue report filed by The Star Entertainment Group for AU$2.6 Billion, it seems that the gaming company may well be one of the biggest gambling operators in the country.

But not all things are bright and sunny in the country down under, as Aquis Entertainment Limited registered a decline in revenue in the first H1 while the company’s CEO Jessica Mellor will also be resigning due to personal reasons.

But the island-continent has been trying hard to amend its gambling laws so as to eradicate the issues related to the industry and the effort has finally come to fruition with the Amendments to Australian Capital Territory’s (ACT) gambling laws ready to be finalized before the end of 2018.

In another move in Australia, the Star Entertainment Group has petitioned the Australian government for construction rights to build a 61-storey hotel next to The Star Sydney Casino & Entertainment complex in New South Wales (NSW). Star has partnered with Hong Kong based Chow Tai Fook Group and Far East Consortium Ltd for the $360.6 Million project.

Back in the U.S, sportsbook operator CG Technology is in the danger of losing its Nevada operating license after gaming regulator Nevada Gaming Commission (NGC) rejected its settlement offer of $250,000 for multiple violations.

Meanwhile in north Michigan, four years after winning the case over the legality of its Vanderbilt-based casino in the U.S. Supreme Court, Bay Mills Indian tribe has entered a fresh legal tangle against the state over the casino’s location.

Australia’s The Star Entertainment Group Maybe Country’s Biggest Gambling Operator

The Australian casino operator The Star Entertainment Group has much to celebrate. After delivering its preliminary final report on its performance in the 12 months ending June 30, the casino operator reported a rise in revenue by 6% year-on-year to a record AU$2.6 Billion (US$1.9 Billion), while earnings slipped 19.2% to AU$484.4 Million and Net Profit After Tax (NPAT) tumbled 44% to AU$148.1Million.

Australia’s The Star Entertainment
Australia’s The Star Entertainment

Australian gaming firms often use a metric known as ‘normalized’ results, which assumes a constant VIP gambling win rate, on the assertion that this provides a more accurate representation. On application of this filter, The Star’s revenue was up 15.3%, earnings gained 14.3% and NPAT rose 20.3%.

The Star’s statutory NPAT suffered from AU$37 Million in significant items, including debt restructuring and expenses related to the launch of its refurbished Gold Coast property. Additionally, in May, The Star’s Asian VIP gamblers had a prolonged hot streak, due to which the year’s VIP win rate came in at 1.16%, well below the 1.59% from the previous fiscal year and the 1.35% average assumed under the ‘normalized’ heading.

However, the VIP turnover was up 54.3% to AU$61.2 Billion and statutory revenue rose 11.2% to AU$711.5 Million. The company stated that the VIP gains were a result of “sales-driven diversification strategy” and “market normalization”, with the casino’s flagship property in Sydney raking in the majority of the VIP turnover at AU$52.5 Billion.

Meanwhile, the operations in Queensland reported a revenue rise of nearly 13% while earnings remained constant at AU$199 Million.

Poor Performance in H1 for Aquis, CEO Jessica Mellor Resigns

The revenue of AU$12.3 Million (US$9 Million) reported by the Australian-listed casino operator Aquis Entertainment Limited in the first half of 2018 is down by 3.6% as compared to the same period last year.

Following this, in separate filings to the Australian Stock Exchange, the company announced that its chief executive officer (CEO) Jessica Mellor, who had been appointed in 2013, had resigned and that that its partnership with Executive Sports and Entertainment Pty Limited (ESE) would not be coming to fruition.

Aquis Entertainment Limited
Aquis Entertainment Limited

The Hong Kong-based company mentioned that its CEO Mellor was resigning from her designation for personal reasons and will officially leave the company in February 2019.

Commenting on its performance from January to June, the Casino Canberra operator stated, “[a] strong budget has been set for the year, with the expectation of positive EBITDA and cash flows for the full financial year and the half year results achieved have been in line with those targets,” and noted that total operating expenses were down by 19.5% from the previous year, to AU$14.5 Million (US$10.7 Million).

Chairman Tony Fung speaking of Mellor’s resignation said, “The company will work to ensure that the transition over the coming months is as seamless as possible, and the positive momentum generated to date is maintained.”

Regarding the discontinuation of its partnership with ESE, the company stated that, “the parties were unable to reach agreement on the final terms.” They also said that “[n]o financing arrangements relating to the proposed joint venture… have been entered into,” and that they were not pursuing an eSports business at present.

Australian Capital Territory (ACT) Aims to Implement Gambling Reforms

The Australian government had been striving to rectify it gambling laws in order to eradicate the country’s gambling troubles and the Amendments to Australian Capital Territory’s (ACT) gambling laws are now in progress. According to ACT Attorney General Gordon Ramsay, they will be finalized for presentation before the end of 2018.

Australian Capital Territory (ACT) Aims to Implement Gambling Reforms
Australian Capital Territory (ACT) Aims to Implement Gambling Reforms

The amendments have been made with the intention that provisions on problem gambling would be made clear, as well as clarifying the requirement for casino employees and board members to undergo further training on the matter. The casinos will also be required to have a trained staff member on standby whenever a poker machine is running, along with changes to self-exclusion laws, which will allow casinos to keep problem gamblers at bay.

It has also been reported that, “the ACT government had been remiss in ensuring that casinos’ mandatory contributions were being spent as intended. This is based on findings of the ACT auditor-general after an inspection of the casinos, which are required to give 8% of net gaming machine revenue to community groups.”

Industry association ClubsACT has submitted an e-petition to the Legislative Assembly to prevent the deposit of the 8% contribution to a centrally administered fund, as is being proposed. Instead, the association asked the ACT government to engage in consultations with stakeholders, to conduct a report on the community groups currently receiving the funds, and to provide “a thorough economic analysis of diverting any portion of community contributions to a centrally administered fund, including impacts on current recipients of community contributions and the overhead costs associate with the operation” of such a fund.

The association also pointed out that the tax-free threshold was only AU$300,000 compared to AU$1 Million in New South Wales.

The Star Entertainment Group Planning 61-Storey Hotel in NSW Casino District

The Star Entertainment Group has made a strong bid to enter the New South Wales (NSW) hospitality sector. With plans to develop a 61-storey hotel in the NSW casino district, the group has petitioned the Australian government for construction rights to build the project.

The Star Entertainment
The Star Entertainment

Star, along with its Hong Kong partner, the Chow Tai Fook Group and Far East Consortium Ltd., have announced that the $360.6 Million project will house a Ritz-Carlton Hotel, having 220 six-star hotel rooms and 200 private apartments along with two gyms, a spa and wellness center, a rooftop terrace and a public restaurant.

“Forecasts suggest Australia’s current visitation of around 8.3 million international visitors per annum will rise to 15 million a year inside a decade. To cater for that demand, we need the necessary tourism infrastructure. Sydney lacks sufficient high-end hotels to meet this wave of international tourist demand, led by the rapidly expanding wealthy Chinese middle-class demographic. Australia currently attracts just 1 percent of China’s international outbound travelers,” Star CEO Matt Bekier stated.

The project will be developed on the section of the property that sits along the boundaries of The Star Sydney Casino & Entertainment complex that also holds the new Sydney International Convention Center, The Bays Precinct, Darling Harbour and the Sydney Fishmarket.

To date, The Stars Sydney is the second largest casino in Australia and is a frequent haunt for Asian high rollers.

In March 2017, Star entered the partnership with Chow Tai, hinting that the partnership would help the group leverage the expertise, networks and customer bases of both companies to drive additional VIP growth. Star is also involved in the Queen’s Wharf Brisbane casino resort that is expected to open in 2022.

Nevada Gaming Commission Rejects CG Technology Settlement For Multiple Violations

Disheartening news has come in for CG Technology, a sportsbook operator based out of Nevada. In an ongoing legal battle over multiple violations by the operator, the state’s gaming regulator, Nevada Gaming Commission (NGC) has rejected the $250,000 fine settlement from the operator, calling it, “too low.”

Nevada Gaming Commission
Nevada Gaming Commission

CG Technology faced a four-count complaint for having accepted multiple wagers between 2016 and 2017 via its mobile application from multiple states outside of Nevada, including Maryland. The company also miscalculated payouts on wagers, accepted wagers on completed contests and incorrectly set up a satellite sports betting station at an undisclosed casino’s super bowl party.

The operator has, in the past, been levied with fines for disciplinary misconduct, including a $5.5 Million fine in 2014 and a $1.5 Million fine in 2016. Following the latest complaint in 2016, the then CEO of the company, Lee Amaitis stepped down.

Since that time, CG Technology had self-reported its violations, the Gaming Control Board (GCB) negotiated $250,000 as the settlement amount. Clearly, NGC did not agree.

“I’m not at all impressed that they self-reported,” said Philip Pro, a NGC member. “That’s not a mitigating factor in my view. That’s what you’re supposed to do,” he pointed out.

With Pro suggesting $1.5 Million as a starting point for new negotiations, it’s tough times ahead for the sportsbook operator that has a month to respond or negotiate a new settlement in order to keep its operating license for Nevada.

Michigan Tribe Continues Legal Battle For Operating Casino

Four years after a northern Michigan tribe, the Bay Mills Indian community won a case against the state for operating a casino, the tribe is back in court over a fresh dispute over the casino location.

Bay Mills - Resort and Casinos
Bay Mills – Resort and Casinos

The casino in question is located in Vanderbilt, Michigan and was opened in 2010. Immediately, the state took the tribe to court, arguing it to be illegal even as other tribes located in Michigan’s lower peninsula also opposed its operations. The casino shut shop as the legal tussle continued right up to the U.S. Supreme Court that in 2015 ruled 5-to-4 in favor of the tribe.

However, the dispute continues, and this time over whether or not the location of the casino falls within ‘Indian lands’ has prevented the tribe community from reopening the casino under the Federal Indian Gaming Regulatory Act.

On Tuesday, the state made a motion for a summary judgment arguing that the tribe’s purchase of the land where the casino is built with proceeds from the Michigan Indian Land Claims Settlement Act of 1997 “does not automatically make them Indian lands eligible for gaming under IGRA.”

While the judge’s ruling on the state’s motion is expected in a few weeks, if the motion is rejected, the tribe will again be able to go to trial to argue its case for being allowed to operate its Vanderbilt-located casino.

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