Inside Asian Gaming

INSIDE ASIAN GAMING | September 2009 14 8 (8) James Packer Chairman, Crown Ltd Co-Chairman, Melco Crown Entertainment The last 12months have producedmixed fortunes for James Packer, the chairman of the Australia-based casino operator Crown Ltd and co-chairman of the Macau casino developer and operator Melco Crown International Ltd (Nasdaq: MPEL). Starting with the good news, MPEL’s first integrated resort in Macau, City of Dreams, opened at the beginning of June this year. It puts Crown Ltd firmly on the map as a player in the East Asia gaming market. On the not-so-good news front, some of Mr Packer’s North American casino investments—bought at the top of the market—performed poorly. For example, he experienced a US$290 million write down on Las Vegas-focused gaming company stocks, including a stake in Harrah’s. One bet Mr Packer was considering last year but is probably very glad in hindsight he didn’t make, was to build a Crown casino in Las Vegas. The US$5 billion scheme would have consisted of a 5,000-room hotel and a 324- 40 Richest’ list, also published by Forbes . On the public relations front, Mr Packer is a less prominent figure in Macau than his joint venture partner Lawrence Ho of Melco International Development. The latter tends to front the organisation when it comes to media announcements and interviews. This is not to say Mr Packer takes no interest or leadership role in the business, but he does not appear to relish the razzamataz that goes with being a casino entrepreneur in the way that Sheldon Adelson or Steve Wynn does. metre tower, which would have made it the highest building in the city. Mr Packer, the son of the late Australian media entrepreneur Kerry Packer, inherited US$5 billion in business interests after Mr Packer senior’s death in 2005. He then restructured the business, spinning off the media assets and placing his bets mainly on the gaming sector. This time last year, Forbes estimated Mr Packer’s net worth at US$5.7 billion. This year, after a combination of a crash in global equity prices and write downs at Crown and Consolidated Media, Forbes put his net fortune at US$2.5 billion—a fall of 56%. Following these setbacks, Mr Packer displayed elements of the ‘ordinary bloke’ community solidarity that characterises even Australia’s super rich. He put one of the toys traditionally associated with a billionaire lifestyle—namely his US$50 million yacht—up for sale. He also postponed delivery of a US$60 million private jet and left a swimming pool complex at his family property half-built. The bigger they come, the harder they fall. Relative to the super rich around him, Mr Packer is holding his own. In May this year, he reclaimed the top spot on the ‘Australia’s 9 (-) Kwon Oh-nam President and Chief Executive, Grand Korea Leisure a year ago, he has succeeded in boosting the performance of the organisation’s three casinos, operated under the Seven Luck brand. In doing so he has bucked the global recessionary trend. GKL, a subsidiary of the Korean Tourism Organization (KTO), was established in 2005. It is the only state-owned casino operator in SouthKorea, and is likely tobepart privatised with a flotation on the country’s stock exchange in the second half of 2009. GKL plans to sell off a 49% share in the business between now and 2010 as part of the Korean government’s plan to raise cash from public assets and reduce public spending. As the top boss at GKL, Mr Kwon has control of three of South Korea’s 17 licensed casinos. Two of GKL’s establishments are located in Seoul and one in Busan—all under the Seven Luck brand. Since the venues opened in 2006, GKL has become the biggest single casino operator in South Korea by revenue, with an annual gross of US$284 million last year. Themost obvious hurdle to overcome for all Korean casino operators in building the national market is that only one of Korea’s 17 legal casino venues—Kangwon Land Resort & Casino in Jeongseon-gun—is open to locals. All the others are by law restricted to foreigners. The 64-year-old Mr Kwon is well placed to act as a public relations face for the industry in the battle to relax that regulation. He has impeccable contacts within South Korea’s sometimes labyrinthine bureaucracy from his days at the Korea Trade Investment Promotion Agency (KOTRA). He held a variety of positions there, including heading the agency’s North American office. “An important goal of mine is to help improve the perception of casinos among policymakers, politicians and the general public, making them aware that we are running a good and clean business that’s earning foreign money for the country at a difficult time,” Mr Kwon was quoted saying recently. If South Korea is to compete with Singapore (which is due to open its first casino resort early in 2010) and possibly with Taiwan and Japan, which have both looked at legalisation of casinos, then the Korean industry must be allowed to have bigger venues with more services, such as holiday resort facilities or medical services, Mr Kwon has stated. Since taking up his post in July 2008, Mr Kwon has travelled to several US locations including Hawaii, New York and Washington D.C.—communities with significant populations of ethnic Koreans and Japanese—to pitch a concept he calls the “business casino”. This is essentially a version of the Las Vegas integrated resort model, but scaled down and adapted for an East Asian Mr Kwon plays an important role not only in running an important part of South Korea’s legal casino sector, but also in promoting a positive image of the industry to sometimes sceptical lawmakers. Since his appointment as President and Chief Executive of Grand Korea Leisure (GKL)