Inside Asian Gaming

August 2014 inside asian gaming 33 is projected to open in time for the 2018 Commonwealth Games. However, the consortium has been forced to consider an alternate site after running into opposition over use of public parkland, and the project is expected to face environmental obstacles. Echo is seeking regulatory approval for a $345 million upgrade and expansion of Jupiters, including a new six-star hotel, although the company will delay that investment pending the outcome of the IR process in Gold Coast and Brisbane. Mr Kale and Mr Tong see IRs in Brisbane and Gold Coast, 85 kilometers apart, along with an upgraded Jupiters, creating a gaming hub in the eyes of overseas visitors, with synergies benefiting all properties. Echo’s Treasury Hotel and Casino in Brisbane is adjacent to a nine-hectare redevelopment zone called Queen’s Wharf where the government is offering a new gaming license for an IR as the iconic centerpiece of residential, retail and commercial projects aimed at revitalizing the urban core of Queensland’s capital city. The government has imposed a gag order on the bidders regarding plans for the site. Initially, Echo proposed to spend up to $1 billion on an IR to replace Treasury and has since added credibility to its ambitions of luring Asian customers by partnering with Hong Kong developer Far Eastern Consortium and Hong Kong-based Chow Tai Fook, which owns the largest jewelry retailer in the world. Founder Cheng Yu Tung also owns 10% of Macau casino giant SJM Holdings’ parent company, Sociedade de Turismo e Diversoes de Macau, and earlier this year spent $950 million for a major stake in Macau’s largest junket promoter, Suncity Group. The Cheng family also controls Hong Kong’s New World Development. Echo will own 50% of the Brisbane project, with the other partners holding 25%. “Echo’s partnership gives it junkets on board,” Mr Kale says. The partners also bring broad property development expertise, capital and connections in Asia, he notes. Genting Group holds 7%of Echo, but Australian regulators turned down the Resorts World brand operator’s request to increase its stake. Ironically, Mr Kale thinks Echo’s plight in Brisbane resembles Genting’s when it bid for the Resorts World Sentosa IR in Singapore. “It was a must-win for them. It would have killed their business if someone else got it.” Crown, meanwhile, has teamed for its Brisbane bid with the other short-listed group, Chinese state-owned property developer Greenland. Crown will own and operate the IR while Greenland will own the commercial, retail and residential components. “Crown is by far the better performer, better connected politically, with a board that understands gaming and the Asia story via exposure to Macau, settled and proven management, and deep pockets,” Mr Green says. “Echo’s flagship property has been anything but, and Queensland a bit of a sideshow, apart from Jupiters.” “Generally speaking, customer service is very poor in Australia, and casinos, from a historic standpoint, never really had to compete against international operators,” says Peter Klugsberger, managing director of casino consultancy Ovion Partners. “In my view, the casino industry in the Asian century has changed the established business model, and most Australian casinos do not have the capabilities that are necessary to come up with a true IR that is akin to Singapore/ Macau.” But he adds, “I would consider Crown to be an exception. You can sense they have a very clear strategy of what kind of company they want to become, and they are excellent in executing on [Executive Chairman] James Packer’s bold vision.” Simple math is against Echo, too. If Echo gets the new Brisbane license it will likely consolidate its Treasury operation into the new IR. If Crown gets the license Echo will almost surely stay at Treasury, giving Brisbane two competing casinos producing greater revenue for a heavily indebted state government. “I think Chinese VIP customers will go to all the nice casinos and popular tourism destinations in Australia, such as the resorts in Cairns, Gold Coast and Brisbane.” Junket promoter Tony Tong of Pacific Financial Services In Focus “The absence of established industry names does not surprise me,” Mr Green says. “Asia offers bigger bang for the buck market- wise, a more liberal industrial-relations environment and cheaper access to players—you don’t need to fly them 5,000 kilometers to play.” Editor at Large Muhammad Cohen also blogs for Forbes on gaming throughout Asia and wrote “Hong Kong On Air,” a novel set during the 1997 handover about TV news, love, betrayal, high finance and cheap lingerie.