AML Regulations Killing the Vancouver Gambling Scene?

AML laws to blame for Parq Vancouver Casino losing money?

Parq Vancouver Casino Losing Money, Some say AML Laws to Blame

Since 2018, money laundering has been the most abundant topic surrounding British Columbia’s once-flourishing gaming industry. Hundreds of millions – perhaps even billions – of dollars have been identified moving through BC casinos over the last decade. Provincial leaders are cracking down on the situation, and while putting a strangle-hold on the activities of organized crime syndicates is a huge positive, the impact it’s having on the Vancouver gambling scene is not.

According to recent reports, the Parq Vancouver, the areas largest casino opened in 2017, is not fairing so well. In its first year, the integrated gambling and entertainment venue made nearly $20 million. Following the implementation of new anti-money laundering (AML) regulations, this latest year’s profits are non-existent. The property recorded a staggering loss of more than $150 million.

Is Parq Vancouver Casino Still Viable?

The Parq Vancouver is an imposing structure located in the heart of British Columbia’s most populous city. Its copper-tinted window-wall exterior and unique shape are unmistakable, and are home to a two-story casino, a pair of luxury hotel towers (JW Marriott and The Douglas) on each end, eight diverse restaurants and lounges, and a plethora of other amenities. It is, as its owners describe it, an “international entertainment destination” that proffers “everything in one place.”

At the time the casino was being built – a process that took nearly 3 full years to complete – such a facility was in high demand. It was no secret that some of Asia’s most affluent tourists are drawn to BC, Canada, and that they are keen high rollers on the gaming floor. No doubt, the Parq Vancouver was hoping to capitalize on that foreign cash crop.

What the property’s owners did not know was that Asian VIPs were about to become a thing of the past in Vancouver as exhumed records would soon reveal a deep dark pattern of money laundering, resulting in a strain of new AML policies designed to thwart cash-cleaning by organized crime units.

AML Regulations to Blame for Revenue Loss?

In its first fiscal year, despite hefty loans and mounting debt, the casino drug in a profit of about $18 million. However, when the Office of Attorney General David Eby uncovered a history of money laundering – one that was highlighted by suitcases and duffle bags stuffed with mostly $20 bills amounting to $13.5 million being deposited at the River Rock Casino in nearby Richmond, BC in a single month’s time – began re-scripting the province’s AML laws, BC casinos didn’t look quite so appealing to all those high rollers anymore.

Dundee Corp, minority owner of Parq Vancouver, filed its annual earnings report on March 28, 2019, and the results weren’t nearly so vibrant. On the year ending December 2018, Parq Vancouver lost nearly $153 million. According to research analyst Andrew Hood of M Capital Partners, $112 million of that was spent covering loans. Owners declined to comment beyond the revelations of the report, but Hood took no issue addressing the pink elephant in the room.

“The anti-money laundering regulations in British Columbia have been a problem,” explains Hood. “The regulations were supposed to cut down on illicit gambling but, of course, that hurt volumes across casinos.”

Furthermore, data from Bloomberg reveals Parq has a pair of loans out. The first is a US$220 first-lien term-loan, and the second is a $150 million second-lien term-loan. Being owned by two privately held companies, Dundee Corp and its majority owner, PBC Group, specific details like interest rates do not have to be disclosed. But it’s clear that the Parq Vancouver Casino is drowning in debt.

Global market ratings experts at S&P say there’s every chance Parq will default on its loans. “We still believe that, absent a debt recapitalization, the company will be unable to materially address its high fixed charges and financial sustainability,” notes S&P.

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