Inside Gaming: SkyCity Open to Possible Star Takeover, Tropicana Managing the Taj, and More
This week’s installment of Inside Gaming shares news from Australia regarding the possibility of one of the biggest gaming groups in the region perhaps seeking to acquire another. Also in industry news this week, New Jersey okays the Tropicana to start managing the struggling Trump Taj Mahal in Atlantic City, and Macau junket operators may be facing yet another challenge hampering their efforts to ferry over high-rollers.
SkyCity Entertainment Open to Possible Takeover Offer
Industry-related talk down under over the last couple of weeks has concerned the possibility of Australia’s The Star Entertainment Group, one of the country’s largest gaming groups and operator of three major casinos, possibly taking over the smaller SkyCity Entertainment Group, a New Zealand-based corporation that owns and operates casinos both in Australia and New Zealand.
Following reports of SkyCity possibly seeking to sell the SkyCity Darwin casino in the Northern Territory of Australia (pictured above), the idea of a full takeover by Star Entertainment began to circulated, with that notion earning more notice when SkyCity indicated it would be open to the possibility if Star Entertainment were to initiate such talks.
The Australian Financial Review first reported that SkyCity Darwin was on the market, sharing a week ago news that the SkyCity group “is understood to have approached strategic investors in March to gauge market interest in a handful of its assets including its underperforming Darwin casino, one of its Auckland hotels and several carpark facilities.”
But SkyCity Darwin acting general manager Callum Mallett swiftly denied the casino was for sale, telling The NT News “I am unaware of any decision or thoughts by the company to sell and all you could go on was the decisions made by the chairman in the press.”
Much of the initial speculation followed the recent announcement of the resignation of SkyCity CEO Nigel Morrison, with his eight-year tenure officially ending later this month. During an investor call on Monday SkyCity chairman Brian Moller confirmed that while SkyCity wouldn’t initiate any takeover discussions while concerning itself with finding a new CEO, it was open to considering an offer from Star Entertainment if they presented one.
“If they come forward with a proposal then in the best interests of shareholders we will clearly consider,” said Moller, as reported by The Sydney Morning Herald. According to NT News, Mallett likewise stated that offer could be entertained if it were “too good to be true.”
See the Sydney Morning Herald’s report for a full rundown of recent news and speculation regarding SkyCity’s possible future.
Tropicana Given Go-Ahead to Manage Trump Taj Mahal
Last month we reported here how Carl Icahn, whose Icahn Enterprises recently helped Trump Entertainment Resorts out of bankruptcy by making the company a subsidiary, was less than sanguine about the future of the Trump Taj Mahal in Atlantic City. According to Icahn, the potential for casino expansion in the northern part of New Jersey and its possible affect on Atlantic City “will probably be a death sentence for the Taj and the Atlantic City economy.”
Whatever Icahn’s plans might be for his newly-acquired casino, he now has the freedom to pursue them as New Jersey regulators this week gave its approval for his Tropicana to begin management of the Trump Taj Mahal. The approval was granted without any guarantee from Icahn that he will — as he had earlier suggested he might — invest $100 million in the property, an investment he has indicated he will not be able to make should casinos be allowed to open in North Jersey.
According to the Associated Press, Tropicana president Tony Rodio “told the state Casino Control Commission that Tropicana Entertainment, which Icahn also owns, will invest $15 million right away to fix pressing needs at the Taj Mahal.” Such immediate needs include leaky roofs and renovations to over 150 hotel rooms, all to be completed before the summer.
Rodio further noted that the Tropicana will be moving forward “with two business plans for the Taj Mahal: one that assumes there will not be casinos elsewhere in the state, and one that assumes there will be.”
As New Jersey lawmakers continue to consider legislation to expand casino gaming outside of Atlantic City, debate over a possible state takeover of the city’s management continues as well. Most recently Governor Chris Christie — who had supported the building of casinos in the northern part of the state — said he would instead oppose such legislation if the legislature doesn’t approve a state takeover of Atlantic City.
The Wall Street Journal reports that while the state Senate has already voted to approve the takeover, Speaker Vincent Prieto has held up a vote in the Assembly over some of the provisions in the bill. Meanwhile Prieto has now introduced his own alternate bill, with his position thus prompting Christie’s ultimatum that if the legislation isn’t allowed to move forward, he will then oppose further legislation regarding casino expansion.
Read more from the AP’s report on what Icahn and the Tropicana may do with the Taj at the Courier-Post.
Still More Restrictions on Macau Junket Operators in the Offing
Various measures and domestic policies imposed by Chinese President Xi Jinping to reduce corruption and eliminate graft have had an impact on numerous areas of Macau’s economy, with the gaming industry the most obviously affected thanks to the changes having lessened the freedoms of casino junket operators bringing high-stakes gamblers to the Special Administrative Region.
This week Bloomberg Business reports that companies like Wynn Resorts Ltd. and Las Vegas Sands Corp. “may see a further squeeze in casino revenue” should a new governmental proposal “to tighten operations for new entrants” be enacted.
“Proposals under consideration include raising capital requirements for new junket operators to 10 million patacas ($1.3 million) from 100,000 patacas, and would require at least one Macau resident as a shareholder,” a source with knowledge of the proceedings told Bloomberg.
Such a change would make things even more difficult for junket operators responsible for delivering VIP clients to the casinos, which in turn could continue to have a negative effect on Macau’s overall gaming revenue. “These high-stakes gamblers,” says Bloomberg, still “remain a critical part of the casino industry, contributing about 55 percent of the city’s 2015 gaming revenue.”
Following a relatively hopeful February down only slightly year-over-year, March marked the 22nd-straight month of gaming revenue decline for Macau.
Learn more about the new squeeze potentially coming for Macau’s junket operators at Bloomberg.
Photo: “SkyCity Darwin, Northern Territory, Australia,” Bidgee. Creative Commons Attributions 3.0 Unported.
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