Blackstone, the biggest investment firm globally, has cautioned about an expanding credit crunch occurring in the US that could potentially drain the worldwide economy. However, this won’t hinder Blackstone’s substantial investment towards one of their newest acquisitions, Australian casino operator Crown Resorts.
In 2021, Blackstone bought Crown when founder and then-primary stakeholder James Packer consented to sell the company following an official investigation that uncovered breaches of anti-terrorism financing and anti-money laundering laws. Although investigations concluded that Crown was not capable of properly managing its casino operations, its licenses it kept its licenses in New South Wales, Victoria and Western Australia.
Blackstone refrained from investing substantially in Crown as the legal headaches continued – and still continue. However, it is now set to turn the tables by presenting a proposal to give Crown Melbourne an overhaul.
Time To Shake Things Up
During a visit to the area, the first since Blackstone purchases Crown, President Jon Gray spoke with The Australian and expressed his conviction that Crown has the potential to be one of the top casinos worldwide. Nonetheless, he acknowledged that there’s still progress to be made, despite the popularity the flagship property in Melbourne has had for an extended period.
We want to be a best-in-class entertainment company and hotel business. We understand that there was a lot that wasn’t done right and we’ve got to come in here and operate at the highest standard, the highest standard from a compliance standpoint, but then make them as attractive as possible to customers,” said Blackstone President Jon Gray about Crown Resorts in Australia.
Gray spoke highly of Crown Melbourne, calling it a unique marvel due to its grand size. He emphasized the city’s significant progress and expressed a strong desire to make substantial investments to enhance the property’s assets. He also emphasized the significance of such improvement not only in the casino industry but also in the hotel industry.
The Blackstone boss added that regarding the recent legal proceedings of Crown concerning its eligibility to hold casino licenses in Melbourne, Sydney and Perth, the company has been given a two-year timeframe in each market to improve its standing. So far, he feels it has been meeting expectations.
Crown can and should be a major part of a blooming tourism industry in Australia, according to Gray. He didn’t detail what kinds of changes are coming, but asserted that it’s a “new day” for the company.
Hold On For an Economic Wild Ride
Gray provided the updated while in Australia for the second annual Australia’s Economic Outlook, which was held at the Crown Sydney. The event, centered on business affairs in a global economy, is organized by Sky News and The Australian and took place earlier today.
Gray conveyed that although the recession in the US won’t be as severe as the worldwide financial predicament experienced a few years ago, it will bring about judicious borrowing practices throughout the banking industry.
He pointed out that although global inflation has decreased, it remains more restrictive than projected in the US and Europe. Gray noted that this could have consequences for the regional banking system in the US, which has already been negatively affected by the collapse of First Republic Bank and Silicon Valley Bank, causing depositors to withdraw their money from the financial institutions.
Gray also hinted at the current banking system as operating under a flawed premise. He said that the banking system relies on a certain amount of activity in order to ensure credit facilities are available. As the activity decreases, it creates an impact on the lending segment.
This means lenders are going to be more selective in their approvals. Coupled with the fact that commercial property investments are sliding rapidly, that selectiveness might become even stricter.
This ripple effect will alter the gaming landscape, as well, although not rapidly. If commercial real estate becomes too expensive and can’t be leveraged for growth, there will be a louder argument for a transition to online gaming.
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