Inside Asian Gaming

August 2015 inside asian gaming 27 Cover Story Pyrrhic Defeat? Losing its bid for the Queen’s Wharf project may do Crown Resorts more good than harm. Australia’s largest casino operator and its Executive Chairman James Packer already have more than enough on their plate. Sure it would have been nice for Crown, partnered with China- based property developer Greenland Holdings, to bloody Echo Entertainment’s nose again in Brisbane after horning in on its rival’s erstwhile Sydney monopoly. At the eleventh hour, Crown reportedly sweetened its Queen’s Wharf bid, offering to buy back gaming machines from local clubs and pubs and make a payment to the government if it won. While losing in Brisbane would have been devastating for Echo, it will have a more subdued impact on Crown. “The loss of its Brisbane license bidmakes Crown a bit vulnerable,” GamePlan Consulting founder Sudhir Kale says. “Its two casinos located thousands of kilometers apart in Melbourne and Perth are pitched against a three-casino hub in Southeast Queensland within a hundred kilometer area, not to mention the possible remote threat from Aquis in Canberra and Yorkey’s Knob” in North Queensland, where Hong Kong billionaire Tony Fung has proposed a A$8.15 billion ($6 billion) integrated resort. Crown has its own ambitious plans across three continents. On the Las Vegas Strip, it’s developing Ālon, estimated to cost $4 billion. Mr Packer is returning to the US market despite massive write offs of previous US gaming investments, including $2 billion on Fontainebleau in Vegas. In Australia, Crown still must develop its A$2 billion Sydney resort on the harbor in Barangaroo, directly competing with Echo’s Star. Crown also holds a 34% stake in Melco Crown Entertainment which launched the $1.3 billion City of Dreams Manila last December and will open the $2.3 billion Macau Studio City later this year. The joint venture with Lawrence Ho-controlled Melco International—Mr Ho co-chairs Melco Crown with Mr Packer and serves as the company’s CEO—has seen its profits hit by the ongoing revenue slump in Macau. “I think Crown will find it is better served by focusing on Barangaroo, Las Vegas, and the somewhat under-performing City of Dreams Manila,” Newpage Consulting Principal David Green says. “I also think investor support will be greater for a more focused, less opportunistic strategy in a jurisdiction they understand.” Crown has its own ambitious plans across three continents. On the Las Vegas Strip, it’s developing Ālon, estimated to cost $4 billion… In Australia, Crown still must develop its A$2 billion Sydney resort on the harbor in Barangaroo, directly competing with Echo’s Star. billion to improve their gaming facilities, with an emphasis on VIP offerings. Junket promoters, hungry for business as Macau VIP play continues to contract, are embracing these opportunities. Mainland players, looking for alternatives to Macau, are also embracing Australia as Chinese immigration there increases business and family ties. Morgan Stanley says Echo will benefit most from the trend, forecasting its VIP revenue will grow 52% this year and 29% next year, largely thanks to improved facilities at The Star and Jupiters. With its Brisbane monopoly secured and other properties benefiting from needed updates, 2015 is shaping up as a banner year for Echo. The winning plan for Queen’s Wharf and its strong partners suggest Echo has even better years ahead. 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. Rendering of the upcoming Crown Sydney Mr Bekier predicts VIP revenue at Queen’s Wharf will match the 30% share achieved at The Star in Sydney, amounting to about A$400 million last year.