Casino Canberra Continues Loss Trend
The losses for Casino Canberra have been piling up. With the reporting of the first half of 2019, the casino lost another $2.5 million. Losses have been increasing from one year to the next for the past several of them.
But could an ACT Government redevelopment option save the day?
Casino History
First opened in the summer of 1994, Casino Canberra is located in the Central Business District of Australia’s capital city. It holds a special place in the city as the first legal casino to open in the Australian Capital Territory (ACT).
The casino did well for many years. It now has 39 gaming tables for table games like blackjack and roulette, as well as a poker room and sports lounge affiliated with TAB. There are regulars and a stream of customers that prefer that type of gambling.
But Casino Canberra hasn’t been able to keep up with the times for several reasons.
First and most importantly, it does not have a license to operate pokies. The lack of that gambling option for casino customers has proven to be a detriment.
Second, it is not operated in conjunction with a hotel or concert venue, things that help more modern casinos attract customers.
Casinos Austria International was the original operator of the casino. It was acquired by the Aguis Group, owned by Hong Kong billionaire Tony Fung, in 2014.
Last year, Blue Whale Entertainment acquired the casino for $32 million. And that made Blue Whale a majority shareholder in Aquis Entertainment.
Latest Financials
According to the financials for the first six months of 2019 – the period ending June 30 – Casino Canberra reported a loss of $2,553,772.
That loss was up from the same period in 2018, at which point the company reported a loss of $2,156,212. The year-on-year losses increased by 18.4%.
Revenue was down as well. Casino Canberra reported $11,985,194 in revenue, down 2.7% from $12,317,421 in the same period last year.
EBITDA was down 176.2%, earnings before interest and tax were down 34.7%, and operating costs had increased, though not significantly.
Casino Can’t Catch a Break
One obvious improvement that would help Casino Canberra increase business would be the addition of poker machines.
However, the government has refused numerous times to remove the restrictions originally implemented when the casino was built. Other establishments in Canberra that do have pokie licenses have lobbied for years against the casino obtaining them, and they have been successful.
In 2016, Aquis submitted a proposal to the government to redevelop Casino Canberra in exchange for a license to operate 500 pokies. Chief Minister Andrew Barr agreed in principal to 200 machines. However, the redevelopment had to be completed first and the pokies had to be purchased from establishments that currently own them so as not to exceed the machine cap for the region.
Aquis then submitted its final proposal for the $330 million renovation, but negotiations took over and then disintegrated. The government and property could not agree on much of anything, from the final number of online pokies to the details of the redevelopment, such as the amount of land to be awarded to Aquis for the necessary expansion.
It was then that Blue Whale stepped in to take over the casino’s operations.
Blue Whale seemed to have high hopes for Canberra Casino, despite significant financial losses posted in 2016 and 2017. But Blue Whale had plans to attract more customers and “reinforce Casino Canberra as the entertainment hub of the nation’s capital to drive even greater numbers of visitors.”
Hopes Persist
Even in the Aquis financial report for the first half of 2019, hope was written into the Director’s Report.
The plan was to continue to apply the medium-term strategy outlined in 2016, which consisted of “demonstrating the Group’s ability to significantly improve an underperforming operation by a combination of leadership and targeted investment in the business.”
That strategy was going to be advanced by refocusing marketing activities on past refurbishments. There would also be more importance placed on controlling costs, streamlining business processes, and working more closely with the ACT Government with regard to redevelopment options.
The government is reportedly open to examining a new bid for a Casino Canberra redevelopment project. This now falls into Blue Whale’s hands, and it will have to decide how to proceed.
It may be a principled stance to push for more pokies and land. However, years of negotiations have shown that the government is not going to budge. Blue Whale will need to decide if a redevelopment is worth the trouble. Or, if it should try to find a new site for relocation.
