Star Entertainment to Aussie Government: You Want Gold Coast Investment, We Want Exclusivity

Posted on: December 16, 2019, 04:38h. 

Last updated on: December 16, 2019, 04:50h.

Todd Shriber @etfgodfather Read More

Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Star Entertainment Group wants to invest $1.37 billion ($2 billion in Australian dollars) to refurbish its Gold Coast gaming property, hotel and convention center, and the company is playing hardball with the Queensland government when it comes to that expenditure.

In exchange for that investment, the operator wants 30 years worth of monopoly protection, ensuring its Star Gold Coast property would remain the lone gaming venue in the region. As part of efforts to boost tourism, Queensland officials have been entertaining adding a second integrated resort to the area. Star Entertainment has previously said it supports the efforts to increase traffic to the region, but added that the area isn’t a two-casino market.

Tourism Minister Kate Jones said in November the Queensland government was entering into talks with Star to expedite new infrastructure in the region. They also want to get a handle on the operator’s timeline for realizing the promised $1.37 billion in investments.

The formal process being used for the Star Entertainment Group negotiations are in line with the state government’s exclusive negotiating framework under the Department of State Development.” said Jones, according to The Australian.

Star Gold Coast, which is over three decades old, has more than 1,600 slot machines and gaming devices, and over 70 table games.

Plans And Competition

The gaming company has already committed more than $68 million to renovate the Gold Coast Convention and Exhibition Centre and the Sheraton Grand Mirage. It said it has already commenced construction on a $400 million hotel and residential tower in Southeast Queensland.

Star wants monopoly assurances from Australian policymakers, but believes Annastacia Palaszczuk’s government continues to woo operators for a second Gold Coast gaming license.

Earlier this year, Caesars Entertainment Corp. (NASDAQ:CZR) scuttled its plans down under after Eldorado Resorts, Inc. (NASDAQ:ERI) announced a $17.3 billion takeover bid for the Caesars Palace operator. However, it is rumored that Galaxy Entertainment, Hard Rock International, and Melco Resorts are among the companies still mulling a Gold Coast integrated resort.

Decision Time

Jones is reportedly hoping that the Palaszczuk government can work out a deal with Star Entertainment early in 2020 after originally hoping to come to terms before Christmas.

The gaming company, which is also developing the Queens Wharf Casino in Brisbane, has been attempting to drum up support for the monopoly gambit among member of Palaszczuk’s Labor party, of which Jones is one. But it remains to seen if those efforts will pay dividends.

With our regional tourism organizations, today I can announce that we are spending more than half a million dollars on these new marketing campaigns that will reach tens of millions of Europeans,” said Jones in a recent statement. “The Great Barrier Reef will be central to these campaigns, because we know that it generates around $6 billion a year for Queensland and supports more than 59,000 full-time jobs across our state.”

That statement makes clear that Jones’ priority is boosting tourism to her corner of Australia. Whether or not that jibes with eliminating competition to Star remains to be seen.