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Posted on: June 9, 2023, 07:55h.
Last updated on: June 9, 2023, 10:49h.
Blackstone, the world’s biggest investment firm, is cautioning that an expanding credit crunch occurring in the US could potentially drain the worldwide economy. However, this won’t hinder Blackstone’s substantial investment toward one of its newest acquisitions, Australian casino operator Crown Resorts.
In 2021, Blackstone bought Crown when founder and then-primary stakeholder James Packer consented to sell the company. That was following an official investigation that uncovered breaches of anti-terrorism financing and anti-money laundering laws. Although investigations concluded that Crown wasn’t capable of properly managing its casino operations, it kept its licenses in New South Wales, Victoria, and Western Australia.
Blackstone refrained from investing substantially in Crown as the legal headaches continued – and still continue. However, it is now set to turn the tables by giving Crown Melbourne an overhaul.
Time to Shake Things Up
During a visit to the area, the first since it purchased Crown, Blackstone President Jon Gray spoke with The Australian and expressed his conviction that the property has the potential to be one of the top casinos worldwide. Nonetheless, he acknowledged that there’s still progress to be made, despite the popularity the flagship property in Melbourne has had for an extended period.
We want to be a best-in-class entertainment company and hotel business. We understand that there was a lot that wasn’t done right and we’ve got to come in here and operate at the highest standard, the highest standard from a compliance standpoint, but then make them as attractive as possible to customers,” Gray said about Crown Resorts in Australia.
Gray spoke highly of Crown Melbourne, calling it a unique marvel because of its grand size. He emphasized the city’s significant progress, and expressed a strong desire to make substantial investments to enhance the property’s assets. He also emphasized the significance of such improvement not only in the casino industry, but also in the hotel industry.
Gray added that because of the recent legal proceedings surrounding Crown and its eligibility to hold casino licenses in Melbourne, Sydney, and Perth, the company has been given a two-year time frame in each market to improve its standing. So far, he believes it has been meeting expectations.
Crown can, and should, be a major part of a blooming tourism industry in Australia, according to Gray. He didn’t detail what kinds of changes are coming, but asserted that it’s a “new day” for the company.
Hold On for a Wild Ride
Gray provided his update while in Australia for the second annual Australia’s Economic Outlook, which was held at the Crown Sydney. The event, centered on business affairs in a global economy, is organized by Sky News and The Australian, and took place earlier on Friday.
Gray said he doesn’t believe the recession in the US will be as severe as the worldwide financial predicament experienced a few years ago, but said it will bring about judicious borrowing practices throughout the banking industry.
He pointed out that although global inflation has decreased, it remains more restrictive than projected in the US and Europe. Gray noted that this could have consequences for the regional banking system in the US. That has already been negatively affected by the collapse of First Republic Bank and Silicon Valley Bank, causing depositors to withdraw their money from the financial institutions.
He also implied that the current banking system is operating under a flawed premise. He said that the banking system relies on a certain amount of activity in order to ensure credit facilities are available. As the activity decreases, it creates an impact on the lending segment. This means lenders are going to be more selective in their approvals. Coupled with the fact that commercial property investments are sliding rapidly, that selectiveness might become even stricter.
This ripple effect will alter the gaming landscape as well, although not rapidly. If commercial real estate becomes too expensive and can’t be leveraged for growth, there will be a louder argument for a transition to online gaming, Gray says.
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