The casino businesses of Australia have been under pressure since regulators deemed it timely to investigate the respective businesses and find them guilty of bad behaviour warranting a potential loss of their licences. It’s been a sad chapter in Australian corporate history. However, Crown Resorts looks like it has learnt its lesson with the appointment of former Virgin Australia boss, John Borghetti, as its new chairman.

In case you missed it, when it was a listed company, Crown’s behavious caused so many problems with the regulator that it was forced to sell out to US private equity group, Blackstone, which installed US casino executive, Bill McBeath, to chair the company, as it re-invented the gambling and hospitality business.

To all intents and purposes, while its rival (the still-listed Star Entertainment Group) continues to struggle to impress the country’s regulators and is in danger of losing its licences, Crown looks to have smartened up big time. This explains why a local of Borghetti’s calibre has now been asked to steer the business going forward.

The chart below shows what happens when a casino operation can’t get its business model right.

Star Entertainment Group Ltd (SGR)

But this isn’t just a success story for the new owners of Crown Resorts coming back from the corporate dead, it’s also a great Aussie success story of the son of an Italian immigrant.

Over the years I’ve interviewed John Borghetti when he headed up Virgin Australia. It must have been a tough job managing an airline that was dwarfed by Qantas and was owned by five airlines that were effectively rivals of Virgin. And Borghetti didn’t have government-support to stop Alan Joyce using his market power to prevent real competition in the airline space.

Governments of the day wouldn’t stop predatory pricing from Qantas, which was a rational action for the biggest competitor to do but it undermined the profits of both airlines. Ultimately, the smallest player was going to have to give in.

Ironically, Borghetti was a previous second-in-charge at Qantas and was a surprise loser to Alan Joyce as the successor to the old CEO Geoff Dixon in 2008. This is a guy who started at the bottom of Qantas as a young man, after helping his restaurant-owning parents look after his siblings in the evenings as they tried to grow their Melbourne-based business. His climb to the top of Australia’s corporate corridors into controlling the boardroom of one of this country’s leading hospitality businesses, is a story that shows this country doesn’t close the doors on anyone who’s truly aspirational and inspirational.

Borghetti has the right business breeding to be in the entertainment game and has had a period proving himself to Blackstone as the current chairman of Crown Sydney.

Under his guidance, the operation recently was given a timely thumbs up from the regulator. “In April, Crown was given the green light to run its Sydney casino without restrictions on gambling limits and without a regulator-installed special monitor, three years after a NSW inquiry found the gaming giant unsuitable to operate in the state,” explained the AFR’s Zoe Samios. But as a business, there remains obstacles that a legitimately run organisation has to deal with compared to a casino that’s running amok breaking all the rules. And then there have been other challenges such as:

1. Interest rate rise hits to household disposable incomes and gamblers’ budgets.
2. Lower tourism numbers in slower growing global and local economies.
3. Restrictions on offerings to high-end gamblers, especially from overseas.
4. Crown Melbourne is migrating 2,600 poker machines to card-operated, which is expected to reduce earnings.
5. The work-from-home trend that reduces the potential local players, who could frequent the company’s entertainment precincts.

In a nutshell, Borghetti is inheriting a tougher business to run, but given his lifelong learning at the coalface of small and big businesses, and his impeccable credentials as a company man this country can be proud of, Blackstone hasn’t really gambled at all appointing him as chairman of Crown Resorts.

This was a great hospitality business with many problems and needed rescuing. Blackstone has commenced that rescue operation, and they expect their new chairman to complete the task of re-making Crown into a respectable business.

If John Borghetti can’t do it, I doubt anyone could. (Am I biased on John Borghetti? Yep, but a lot of that was because, unlike many CEOs, in the 12 years I hosted the Switzer program on the Sky Business channel, he’d show up on TV to explain how the company was going, whether the news was good or bad. There weren’t many with the guts to do that.