The Chinese government directive urging its citizens not to travel to Australia threatens to render a still under construction $2.2bn casino complex on Sydney harbour a “white elephant”, according to industry experts who say the project can no longer rely on income from high-roller gamblers from China who were central to its business model.
Gambling academics and city planners have all expressed concern over the future of Crown’s Sydney casino at Barangaroo as a result of the Chinese Ministry of Culture and Tourism’s warning to Chinese residents “to enhance their safety awareness and do not travel to Australia” issued last week, citing a spike in racism during the coronavirus pandemic.
Senior gaming industry advisers told the Guardian the Chinese government had previously been successful in directing where Chinese citizens gamble, noting Macau, and while most Australian casinos will suffer from last week’s travel warning, it appears to impact Crown’s planned Sydney casino most directly.
Crown – whose ownership and allegations of high-roller junkets and money laundering are the subject of a NSW parliamentary inquiry and other planned inquiries – has attracted controversy over plans to target VIP players at the 75-floor tower that will also include 82 luxury apartments and a six-star hotel, due to open in December, ahead of the casino’s opening in early 2021.
However, the future revenue stream of the skyline-dominating building, which was controversially approved for the city’s second casino license in 2013 without going to tender, has been thrown into question after a drop in high rollers in recent years, related to a series of events that include Crown employees being arrested in China in 2016 for promoting gambling, and efforts from Beijing to limit gambling spend outside of the country.
This has prompted industry observers to question the viability of the Crown Sydney project relying solely on foreign high rollers, and while Crown has not applied for poker machines – considered a reliable income source for casinos – its future rival Star City recently secured a 21-year exclusivity deal with the New South Wales government to be the only Sydney casino with poker machines.
While the group’s strategy throughout Covid-19 closures saw it stand down about 95% of its 11,500-strong workforce while securing funding to continue construction of the Barangaroo site during the pandemic, revelations surfaced that Crown had organised invite-only events for VIP players at Fairfield and Rooty Hill RSL clubs earlier this year, which the company’s chief executive, Ken Barton, responded to by saying Crown Sydney “has always, at its heart, been a destination designed for both Sydneysiders and visitors alike”.
Charles Livingstone, an associate professor of public health and head of the gambling and social determinants unit at Monash University, told the Guardian that while the Chinese travel warning would also affect middle-class tourists who stay in and gamble at Australian casinos, the drop off in high rollers presented a bigger threat to casinos.
“Where are they going to get the gamblers from now? That’s a very good question because ... their finances rely on a high number of high rollers from China. I’d say they are in very difficult circumstances,” he said.
Livingstone, a longtime critic of Crown, warned the Barangaroo casino may look to target local gamblers and negotiate with the state government for a poker machine licence, citing the casino’s contribution to the economy.
However, Livingstone, who has researched the social implications of gambling, argues “gambling in general is probably a net loss for any government”.
“Many casinos in Australia have opened on the promise they won’t have pokies and usually within five years they end up with pokies,” he said.
There is no evidence to suggest Crown has made any attempts to secure poker machines for its Sydney casino and it has ruled out doing so in the past.
Crown has previously noted it has “a comprehensive anti-money Laundering and Counter-Terrorism Financing program” in place which is subject to Austrac supervision, and defended its dealings with Chinese junket operators as being registered with their local authorities.
Mike Harris, an academic in urban architecture at the University of New South Wales who has researched the Barangaroo project, said the casino will “become a white elephant” if they are forced to rely on the high-roller customer base from China given Beijing’s travel warning.
“If that high-end Chinese market wasn’t available maybe the Barangaroo casino wouldn’t have gone ahead in the first place,” Harris said.
He told the Guardian the approval process for the casino and “a lack of transparency around planning amendments” had damaged “faith in the NSW planning system”.
Harris predicts Crown will negotiate for a poker machine licence, or will try to boost the number of luxury apartments – which start at $9.5m – as a way to restructure Barangaroo’s profitability.
“If they are forced to remain a high-end roller casino, and we’re not getting these whales (high rollers), it will become a white elephant,” he said.
Victor Dominello, the NSW minister responsible for liquor and gaming, told the Guardian “we are encouraged by Crown Sydney’s plans to open early next year. The facility is expected to directly employ over 2,000 staff once fully operational”.
The Sydney lord mayor, Clover Moore, a longtime critic of the Barangaroo casino, told the Guardian “gifting public foreshore land to a casino giant remains an outrageous betrayal of the community’s trust, and an abuse of power that places private profit ahead of the public interest”.
The Guardian contacted Crown for comment.
