The Star Expected To Lose A$270 Million After Crown Sydney Opening

The Star Entertainment Group, one of the largest operators of land-based casinos in Australia, is expected to experience some financial losses after rival operator Crown Resorts has opened its casino in Sydney.

Crown Sydney finally began operations on August 8 following a long period in which it wasn’t allowed to open the casino because the New South Wales regulator deemed the company unsuitable for holding a casino license.

That doesn’t represent good news for The Star Entertainment Group, the company that owns and operates The Star Sydney, a resort which has been a local landmark for over 20 years.

An analysis published by J.P. Morgan, the famous global financial services company, estimates that Crown Sydney will manage to attract some of the customers that had been used to visit The Star Sydney and in the worst-case scenario that would generate losses of 270 million Australian dollars for The Star.

The analysts at J.P. Morgan revealed that the two casinos are competing for around 30,000 regular players, divided into three loyalty tiers: Chairman, Sovereign, Oasis and Vantage.

For the 2021 fiscal year, this segment of players generated revenues of 470 million Australian dollars, while The Star Sydney had total revenue of 736 million Australian dollars for the full year.

The J.P. Morgan analysis estimates that Crown Sydney will most likely target the top two tiers of players, Chairman and Sovereign, with revenues of 248 million Australian dollars up for grabs. The highest risk of revenue loss for The Star Sydney comes from table games, which generated 174 million Australian dollars.

Revenue from slots, which is expected to amount to 74 million Australian dollars, is most likely going to be retained by The Star Sydney. However, if Crown Sydney will manage to attract players from the Oasis category as well, then a total of 268 million Australian dollars in revenue from table games will be at risk for The Star.

The two companies came close to a merger last year, as The Star Entertainment proposed to merge with Crown Resorts and build a conglomerate that would have been worth at least 12 billion dollars. The proposal was later withdrawn as it failed to generate enough interest from Crown Resorts.

SOURCE: . Asia Gaming Brief. August 9, 2022.