For the next 21 years

Star casino signs deal with government to block pokies at Crown Sydney

“[It] guarantees the operating environment for which we’re paying our taxes, and it de-risks our business for the next 21 years, which is a great thing," sais said Star chief executive Matt Bekier.
2020-06-02
Reading time 2:01 min
The agreement with the government of New South Wales means Star Entertainment will continue to operate the only casino with poker machines in Australia's most populous city, and that it will be paid compensation if Crown is allowed to install pokies at any point before June 30, 2041.

Star Entertainment has entered into an agreement with the NSW government that blocks its soon-to-be rival Crown Resorts from installing pokies at its new Sydney casino for the next 21 years.

Despite denials from Crown, there has been constant industry speculation that the James Packer-backed group would seek to have the license for its $2.2 billion "VIP" casino changed to permit poker machines at some point.

The Star group has also locked in a new, more favorable tax rate for gambling operations at its Pyrmont casino, which opened its doors to a limited number of patrons on Monday afternoon for the first time since March 23.

“[It] guarantees the operating environment for which we’re paying our taxes, and it de-risks our business for the next 21 years, which is a great thing," sais said Star chief executive Matt Bekier.

The initial reopening of the Star property was limited to up to 500 loyalty club members on an invitation-only basis, while up to 50 seated customers will be allowed at the fine dining restaurants and other food venues at The Star Sydney.

The company said it welcomed back a material number of employees as the first step in the re-opening, but restrictions mean that business volumes will be significantly below normal levels.

"We are focused on conservatively managing the business to provide us with the confidence for the next stage of returning our properties to more normal conditions as restrictions unwind," Bekier explained.

The company had stood down about 90 percent of its workforce, or about 8,100 staff, following the closure of its food, beverage, conferencing, and gaming facilities in late March after the government imposed social restrictions to check the spread of coronavirus.

As part of a 20-year tax agreement, Star's table games will be set at a fixed rate of 29 per cent from 2022 - the same as Crown's - while pokies will start at a fixed rate of 32 per cent and increase to 34 per cent after six years.

Macquarie analyst David Fabris forecast that the new deal would translate to an average tax rate of 30 per cent in the years 2022 to 2024 for Star, which will lift to around 31 percent from 2028. Star said its average tax rate was 31.5 percent in 2019.

Those rates are higher than at Crown's casinos in Melbourne (26 percent) and Perth (21 per cent), and Star's casinos on the Gold Coast (26 percent) and Brisbane (25.6 percent).

The Sydney Morning Herald and The Age revealed last month that Crown was building relationships with some of Sydney's largest clubs and RSLs as it faces the prospect of opening its Barangaroo casino in February while cut off from international high rollers.

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