Crown Resorts Reported $633M Loss, Expecting $413M in Fines.

The business has enormous recovery potential, provided a few key factors causing the crash are addressed. These are the implementation of internal changes that address and fix any regulatory failures of the Company, as well as a sustained improvement in operating conditions. If these conditions are met, the Company’s prospects remain relatively optimistic.

Crown Reported Large Losses

Blackstone’s Crown Resorts released its results for the year ended June 30, with one of the highlights being a reported loss of nearly A$1 billion: A$945 million (about $633 million), to be precise. Reports cite a spokesperson saying this was mainly due to difficult operating conditions, but the information also indicates Crown’s regulatory costs are around AU$ 617 million (approx. US$413 million). The loss of US$633 million was an almost four-fold increase from the previous comparable period when it was AUD$261.3 million (US$175 million).

A further increase was also seen in the negative columns of Crown’s staff costs, where the Company spent AUD$145 million ($97.1 million) on additional responsible gaming staff, as well as legal fees and consultancy, also attributable here. One factor was the Company’s total expenses, which rose to A$3.09 billion ($2.07 billion), up from A$1.98 billion ($1.33 billion) in fiscal 2021. The closure of Crown’s Sydney operations also means there was one less revenue stream to offset. Overall, the Company’s net loss was A$1.24 billion ($830 million) but was A$296 due to a lack of revenue.

The difference of AUD 3 million ($198.4 million) to the reported loss of AUD 945 million (approximately $633 million) came from tax benefits.

Regulatory, Operational Hurdles

The total regulatory spend of A$617 million (approximately $413 million) in Crown’s report includes all fines that have been or are expected to be imposed. However, the number is relatively high as the Crown has come under scrutiny. This was expected from two royal commissions and an inquiry into its operations in Victoria, Western Australia (WA), and New South Wales (NSW). The Company’s Melbourne and Perth stores operated during the financial year, but its Sydney casino did not work in 2022. This took Crown Melbourne’s revenue to A$923.8 million ($619.9 million) and Perth’s revenue was relatively flat, declining slightly to A$731.7 million ($491.4 million) from A$740.9 million ($497.2 million). 

While all of these businesses were ultimately allowed to stay open, they only faced more scrutiny and, in some cases, heavy fines. Crown Melbourne has been hit with a record AU$120m ($77m at the time) fine following an investigation into Crown’s operations and some regulatory changes that are likely to have resulted in a total in the Company’s spend column. This was the first financial report the Company has released since acquiring Blackstone in June. However, as operating conditions, challenges are expected to be resolved. These regulatory issues are not critical in changing the Company’s outlook as long as all regulatory lapses are fixed and operations continue. The Crown Sydney opened its high-roller VIP casino in the Barangaroo Tower in August, and its successful launch is reportedly already being noticed by competitors, which bodes well for the Company’s prospects in the future. /p>