One of British Columbia’s flashiest new developments, Parq Vancouver resort and casino, is having trouble financing its substantial debt – partly due to the province’s new anti-money laundering rules, which have taken a bite out of revenues.
The copper-coloured complex, which houses a two-floor casino, convention space, two hotels and a handful of restaurants and lounges, lost almost $153-million in 2018 – $112-million of that spent servicing loans, according to Andrew Hood, a research analyst at M Capital Partners Inc.
This week Parq, which is owned by Dundee Corp. and Ottawa-based real-estate holdings firm PBC Group, was trying to find another partner to help it make a payment on its outstanding debt, Mr. Hood said.
Silverius Miralles, a Toronto-based research analyst with S&P Global Ratings, said Parq has seen less gambling revenue in part because of a government crackdown on money laundering that began around the time it opened in 2017.
Under British Columbia Lottery Corporation (BCLC) rules that took effect in January, 2018, casinos in B.C. are required to gather detailed information on the source of player funds for all transactions of $10,000 or more.
“There were strict limitations that were being put on high-limit players," Mr. Miralles said. “That basically impacted the entire level of game play, which they were expecting to get not only from local customers but also from international customers too.”
A spokesperson for the casino said on Monday it is privately owned and thus declined to disclose or comment on its financial results. Representatives for Dundee and PBC did not respond to requests for comment.
Mr. Hood said he doubts Parq will miss the payment this week, noting that PBC bought another third of Parq from its original owner, Paragon Gaming, earlier this year and now owns 63 per cent of the company.
“In a worst-case scenario, either PBC or Dundee just injects more money,” he said. “That’s what they’ve done in the past.”
The complex is profitable, he said, noting it brought in $170-million in revenue with $152-million in expenses last fiscal year, but refinancing the costly debt is imperative.
A year ago, in an explosive report to the B.C. government, former Mountie Peter German described Vancouver-region casinos as “laundromats for the proceeds of organized crime.” Mr. German, who was given the task of investigating money laundering in casinos by B.C. Attorney-General David Eby, found that criminal organizations linked to China, Colombia, Mexico and elsewhere have been exploiting gaps left wide open as different agencies responsible for gambling and regulation waged “internecine” turf wars.
The scheme was revealed after investigators discovered that cash buy-ins at one casino totalled $13.5-million for one month, “mostly in $20 denomination bills, the preferred currency of drug traffickers.”
Since then, the BCLC has stated that reports of such suspicious transactions have fallen precipitously at local casinos, with 18 instances totalling $203,840 being reported in November, 2018.
Since the rule changes, Great Canadian Gaming, which owns one of Parq’s largest competitors, the River Rock, has seen gambling revenues at its five B.C. casinos fall 3 per cent last year to $268-million, according to its financial statements.
“A part of the decrease in gaming revenues was also due to the BCLC source of funds procedures,” the filing stated.