Genting, Hard Rock Considering Crown Resorts Buyout
After Wynn Resorts terminated its buyout offer of Australia’s Crown Resorts, two other major casino competitors seem interested in the same deal. Deutsche Bank analysts say Genting Group and Hard Rock International both are considering proposals for Crown Resorts.
Speculation had centered on the idea Wynn Resorts would renew its offer. If it does, the Las Vegas casino company might have to compete with one or two of the giants of the casino industry.
Hard Rock International and Genting Group are stalwarts in the casino industry, though their paths to promince were much different. Genting Group is a major international player with a lot of experience in the Asia-Pacific region.
Hard Rock International is mostly a domestic American casino company, though it has international experience in the non-gaming category. The important thing is both have huge resources to pursue a buyout of Crown Resorts, along with the capital reserves to usher its Crown acquisition into a new era.
Crown Resorts’ Rise and Fall
First, a recap. Crown Resorts is Australia’s largest land-based casino operator. From 2004 to 2014, its 33% interest in Melco Crown (now Melco Resorts & Entertainment) gave it an edge over its Aussie rivals. Top shareholder James Packer was Australia’s richest person.
Then a series of hammer blows hit the company. Macau’s surging casino market was rocked by Xi Jinping’s anti-corruption crackdown. Macau casino companies lost 40% of their value in two years.
Then the Shanghai police arrested 18 Crown employees for illegal casino ads. Crown bought the workers’ freedom with a $1.5 million fine and a pledge to leave the Chinese market. James Packer announced he would focus on Australian ventures, but it was hard to lure Chinese VIPs to Melbourne and Perth without their Macau presence and ad buys.
Australian Casino Market
Crown Resorts still has a lot of assets, including the forthcoming Crown Sydney, which opens in 2021. One of its biggest assets is the monopoly or duopoly status it has in much of Australia. As gaming analyst David Bonnet of Delta State Holdings told Bloomberg, “Acquisition is the only way to enter a monopoly-style market.”
Armed with that knowledge, Crown Resorts did not immediately jump at Wynn Resorts’ buyout offer. Instead, its executives leaked the offer to the Aussie press, perhaps hoping to elicit more and better offers. If so, it worked. While Wynn bowed out, two major operators now are considering their own buyout offers.
About Hard Rock International
Hard Rock International is the gaming division of the Seminole Tribe of Florida. First recognized in 1957, the Seminole Tribe now owns 6 reservations in the state of Florida.
The Seminole’s gaming empire began with bingo parlors in 1975, but grew into a tribal casino network in the wake of the 1988 Indian Gaming Regulatory Act. The Seminoles have a casino table games monopoly in Florida, along with a near-monopoly on slot machines.
The operations are substantial enough the Seminoles once offered the state of Florida $3 billion over 7 years to maintain the status quo. Incredibly enough, the Florida legislature refused the proposal, thinking it wasn’t enough.
Seminoles Buy Hard Rock Cafe
In 2007, the Seminoles bought Hard Rock Cafe International, which became the brand name of several non-tribal casinos. “Hard Rock” is a franchise name, so the Seminoles don’t own every single Hard Rock establishment (or casino). For instance, Richard Branson owns Hard Rock Las Vegas.
In 2017, Hard Rock International bought the Trump Taj Mahal from Carl Icahn and renamed its Hard Rock Atlantic City. The tribe invested $500 million in a renovation and reopened the casino in June 2018, which has been a big success. Flush with its Florida casino money and funds from its international resorts, Hard Rock has the resources to make a major Crown Resorts bid.
About Genting Group
Genting Group is the Malaysian multinational conglomerate which is building Resorts World Las Vegas, the most expensive casino in Las Vegas history. Genting also owns Resorts World Sentosa in Singapore, one of the most lucrative casinos in the world.
The company owns two casinos in New York state, Resorts World Catskills and Resorts World New York City (Aquaduct in Queens). Beyond those assets, Genting also owns oil platforms in the Indian Ocean and rubber plantations throughout Southeast Asia.
Founded by Malaysian businessman Tan Sri Lim Goh Tong in 1965, Genting owns cruise lines, hotel resorts, power grids, and e-commerce sites around the world. Now led by Tan Sri Dato Seri Lim Kok Thay, Genting commands vast non-gaming resources to put toward a buyout offer.