The Star is not okay with losing position on the market

Ray Allen

Australia is the largest market player in the gambling industry. There are over thousands of casinos and different gaming venues, as well as the vast majority of the population,  is involved in one or another type of gaming activity. 

Though, the inner market of Australia in the industry of gambling, which is also one of the most spheres of economic growth as well as tourism, is very competitive and casinos keep competing on the severe scale continuously. Being the leader of the prime is very important for the industry. 

One of the biggest casinos and one of the biggest companies in Australia generally The Star Entertainment Group is the one who decided not to give the list leading position to anyone else, and so presented the new $2 billion Broadbeach Island project to the NSW (New South Wales) government. 

The Solo Player 

The major reason for launching such a big project, from the side of The Star, which is already a local giant in the market is that they want to remain as an only operating casino in Queensland. The regulations concerning gambling in Australia vary depending on the state. So, every state has its own laws and regulations, and consequently, the group has to address the local state authority for permission. 

Everything started when the NSW government announced that they would like to have another casino operating in their market, with what apparently The Star Entertainment Groups was not pleased at all. In response to that, The Star proposed another huge project to the state, which will be several billion-dollar investments in the local tourism department, which from one side is a very wise decision to take. 

The whole $2 billion project includes completing a $2 billion Broadbeach Island master plan, with five additional towers on top of the existing The Star Gand and The Darling. The plan also includes the major revamp of the Sheraton Grand Mirage resort and a $100 million revamp of the Gold Coast Convention and Exhibition Center. The decision though is to be made by the government on the approval of the 237-meter tower at its casino complex in Sydney’s Pyrmont. The mentioned project has already launched. The first tower of which is already completed, while the other is on the air trade for now. The rest of the three towers yet are under the question. The towers are supposed to be the tower gardens and recreational zones, as well as children’s attractions. The Star’s plan to revamp its resorts will result in making the group one of the biggest and luxury and integrated resorts in the region. And imagine, the nine billion investment in the tourism department from only one company, and only for maintaining the solo position in the local market. 

“The Star’s position has always been – we support investment in tourism assets on the Gold Coast – but the Gold Coast market is too small for two casinos,” O’Neill, the owner of The Star Entertainment Group, said. “We are not alone in this assessment of the market. The introduction of another local casino competitor would force us to defend our local market share at the expense of driving incremental growth in interstate and international tourism.”

The Position

The Star is one the casino giant, though coming out of O’Neil’s this year has been very mixed one in terms of making business and revenue. The casino group’s share price jumped 4.5% to $4.66 after the presentation and closed up 5.46% to $4.70 on Thursday. In a trading update for the September quarter, the company reported group revenue was up 1.5% but noted “front money” – the funds a gambler deposits with a casino before going to the table to play – was very flat. It was also mentioned in the statement “While we delivered 10 % growth in unique visitation on the 2018 year, normalized revenue was down 30.7 percent on the previous corresponding period due to substantially lower spend per customer.”

Due to the ongoing circumstances, the costs may be reduced by the company at approximately $300million. The other casino giant and the rival of The Star on the other side, in Melbourne, Crown Resort noted that their shares were trading 1 % higher in mid-afternoon trade despite the sharp drop, which resulted in many questions and protests votes on their annual meeting this Thursday. 

Australia definitely is not going to give its leadership in the gambling industry to anyone else, as The Star is not going to stop being the solo and the most important player in the market. Contributing to several billion to the country’s tourism asset is a valuable reason, though the decision making is still on the NSW government’s side.