Australian casino operator Crown Resorts has been granted a 17-year extension on its Crown Melbourne casino license. The license, which had been set to expire in 2033, has been extended to 2050. The Victorian government has also authorized Crown to add up to 128 extra video poker (pokies) machines to its main casino floor, which currently boasts 2,500 machines. Crown will also be allowed to reduce its pokies’ rate of return to players from 87% to 85%.
Crown also extracted the right to add 40 new gaming tables to its current complement of 400, plus 50 new automated table game terminals to its existing 200 machines. Even better, Crown convinced Victoria to repeal its ‘super tax’ on international and interstate VIP gaming at the end of the current fiscal year. Crown had repeatedly stated that the tax rate puts Crown Melbourne at a disadvantage to casinos in other Australian states, which can afford to offer VIPs more incentives to choose to gamble at their tables.
While it sounds like Crown boss James Packer (pictured) had his way with Victoria’s negotiators, the Herald Sun reported that Crown had been seeking to extend its Melbourne license to 2092. (Gotta let them appear to have won something.) The deal still requires legislative approval but the government is promoting it as a net win due to Crown paying $250m upfront, a further $250m in 2033, with additional payments tied to how well the casino performs. Crown Melbourne is the state’s single largest employer, counting nearly 9k state residents on its payroll.
The deal is the result of a nine-month negotiation between Victoria and Crown following the state’s surprise imposition of a new pokies levy in December 2013. The new annual tax per machine cost operators $5,5000 in the current fiscal year but that figure will quadruple to $22,715 the following year. State treasurer Michael O’Brien insists that the overall number of pokies in Victoria won’t rise above its current level of 30k as Crown will be required to buy its new pokies entitlements from other pub/club operators, some of whom are expected to get out of the pokies business entirely rather than pay the new levy.