Aquis’ Casino Canberra has reported a loss of $7.7 million for 2016, although its chairman, the Hong Kong businessman Tony Fung, said this week he believes the business is on the right track and that the board remains “confident” about the outlook.
To be fair, Casino Canberra was not expected to be in the black this week. Fung purchased the ailing casino in late 2014 for just $6 million, around the time he was seeking approval for his Yorkey’s Knob proposal.
That $6 million was just a drop in the ocean compared to the $8 billion he was prepared to fork out for the since-abandoned Queensland project.
All About the Pokies
Aquis completed a $14 million refurbishment of Casino Canberra, reopening in June 2016, as it strived to fix what the company’s new CEO Jessica Mellor described this week as “years of under-investment.”
“Strong top-line growth is a validation of the new energy we have injected into the business,” she said, citing the fact that the company had delivered significant revenue growth during its two years in charge, 38 per cent in 2015 and 22 per cent in 2016.
“Aquis Entertainment will continue to invest strongly in our long-term plan. Our auditors and directors all believe that the company is financially stable with performance and growth prospects in line with expectations and our business plans.”
The scale of that investment all depends on the pokies. Shortly after Aquis acquired the casino, it petitioned the ACT government to authorize pokie machines on the casino floor, which had previously been permitted only in clubs.
In return, Aquis promised it would invest $307 million on the development in two stages over five years, building two hotels, restaurants and additional retail and entertainment facilities.
Is China a Factor?
The government agreed to the plan in principle last June, to the horror of the clubs, but Greens’ Shane Rattenbury insisted his party would only support the proposal if the pokies were limited to $1 per pin and a maximum $500 jackpot. He has also demanded a mandatory maximum-spend pre-commitment for all gamblers who wish to play the machines.
It’s unclear, at the moment, how Rattenbury’s conditions will affect the deal and whether Aquis will rein in their spending commitment in the face of possible tightened regulatory controls.
Government assessment is now understood to be complete and a recommendation is expected to be passed to parliament imminently.
Another unknown factor is whether the arrest of 14 Crown Resorts employees in China last October on suspicion of promoting illegal gambling will also cause Aquis to rethink its level of investment.
Fung has said he wants to reinvent Canberra Casino as a destination for high rollers, but, since the arrests, domestic casino companies have reported that the steady stream of Chinese VIP gamblers has dried up, which cause the him to think twice.