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April 30, 2019 | BC’s ‘Dirty Money’ Crackdown Biting Casino Profits/Investors

Danielle Park

Portfolio Manager and President of Venable Park Investment Counsel (www.venablepark.com) Ms Park is a financial analyst, attorney, finance author and regular guest on North American media. She is also the author of the best-selling myth-busting book "Juggling Dynamite: An insider's wisdom on money management, markets and wealth that lasts," and a popular daily financial blog: www.jugglingdynamite.com

Over the past decade, developers and investors noted that Vancouver casino revenues grew handsomely while most other casino areas had flat-lined.  Then, in 2018, after years of accepting suitcases and hockey bags full of cash without questions, a new focus on Canada’s anti-money laundering laws have not surprisingly spoiled the party in British Columbia.  See Vancouver’s once rollicking casinos hit by ‘dirty money’ crackdown:

The [Great Canadian Gaming] company reported last month that table drop — the amount of money patrons used at tables to buy chips — fell 16 percent in 2018 to C$298 million at its 10 properties in British Columbia, driven by a decline at River Rock. Revenue from British Columbia also dipped 3 percent due in part to the new source-of-funds procedures, it said.

Recent enforcement of laws requiring disclosure of the source of cash coming into casinos prompted Las Vegas-based developer and operator Paragon Gaming Holding Co. to abandon its interest in the newest Vancouver property Parq Resort, selling its interest to Ottawa-based private realty company PBC Group.  Other investors include Canada’s Dundee Corp.  Now that revenues are down, refinancing of debt has become a problem and S&P has warned of default probability within the year.

Dundee has said it’s seeking to bring in a new partner to Parq by Tuesday. All told, investors had pumped more than C$1 billion in long-term debt and equity into Parq by the end of 2018, according to filings. Dundee, which put in C$142 million of that, has said it doesn’t expect to fully recover its investment and that it could take another year or two before Parq is closer to stable operations.

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April 30th, 2019

Posted In: Juggling Dynamite

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