Inside Asian Gaming

inside asian gaming September 2015 18 has achieved to date in Australia, Macau and the Philippines. Earlier this year, and much to the surprise of many observers Down Under, Crown lost out to rival Echo Entertainment in the bidding for a billion-dollar resort casino in Queensland’s capital of Brisbane. But Mr Packer’s faith in his home country’s potential as a destination for China’s new wealth class remains undiminished, and he is reaping the rewards of a wise decision to reinvest lavishly to secure the international stature of Crown Melbourne and Crown Perth. Crown Melbourne, the corporate flagship and Australia’s largest single private-sector employer, has grown to encompass three hotels, 1,600 rooms, suites and villas in all, and plans are in the works to add another five-star tower with a complement of luxury apartments. Crown Perth is being remade for Asia’s burgeoning VIP trade, a process that will be capped next year with the addition of a $645 million six-star hotel. In Macau, the opening next month of Melco Crown Entertainment’s $3.2 billion, 2,000-room Studio City is widely seen as the herald of a new era for the struggling city. In the Philippines, MCE’s $1.3 billion City of Dreams Manila has started slowly since its grand opening in February, but junket operations went into full gear this summer, and management is confident the property will begin to find its footing in the second half. With a trusted successor in place at the helm of Crown’s board of directors, Mr Packer is turning his attention to conquering Sydney and Las Vegas for his gaming empire. The new chairman, former investment banker Robert Rankin, was appointed earlier this year to lead Consolidated PressHoldings, Mr Packer’s privately owned successor to the Australia media giant he inherited from his late father, Kerry. “Given our global growth and aspirations, this is the right time for the company to make this change,” he said at the time. Consolidated controls just over 50% of Crown’s ASX-listed stock. But unlike his father, a rough-and-tumble businessman famed for his outsized appetites and titanic blackjack wagers, Mr Packer prefers gambling on casinos to gambling in them, and he is determined to secure his reputation beyond where his father had ventured. Australia’s largest city is one of them, and two years ago, he launched a relentless effort that succeeded in breaking Echo’s casino monopoly in New South Wales and won for Crown a license to build a competing super-resort on the last major developable site on Darling Harbour. Crown Sydney, priced at A$2 billion, is forging its way through various approvals and various legal and leasing agreements toward an opening slated in late 2019 or early 2020. Conceived as an exclusive playground for the rich, it will feature 350 rooms and suites and a cache of luxury residences in a skyscraping six-star hotel tower. A pool and world-class spa, conference and meetings facilities and a collection of high-end shops and signature restaurants will round out the offering together with a boutique, tables-only casino for the VIP crowd. If all goes to plan, Mr Packer will have already made his mark in Las Vegas by the time it opens. Crown has laid out US$280 million for a stake in 34.5 vacant acres of prime North Strip real estate purchased out of foreclosure as the future home of Alon Las Vegas, a joint-venture super-resort funded by Crown and US hedge fund giant Oaktree Capital Management and headed by Andrew Pascal, former president and COO of Wynn Las Vegas. Crown expects its end to total as much as $500 million in exchange for majority control of the project, whose final cost will top out at $1.6 billion-$1.9 billion. “We’ve always kept our eye on Las Vegas,” Mr Packer said when the land acquisition was announced last August. “You can’t be in the gaming industry and not have a special reverence for Las Vegas—that’s where it all began.” It’s also where Mr Packer has some history to overcome. Israeli developer El-Ad paid $1.2 billion for the site eight years ago at the height of the property bubble, only to see its plans for a $5 billion New York-themed megaresort called the Plaza Las Vegas crash and burn in the Great Recession. Mr Packer was busy losing around $1 billion himself at that time in a series of miscalculations that included two abortive Strip projects he has since acknowledged as a “disaster.” Of course a lot has changed since. Las Vegas is back. Crown is a bigger, stronger company. Mr Packer is smarter and more experienced. Notably, one thing he did come away with fromhis first foray into Sin City was a $22million stake in Caesars Entertainment, which provided Crown with an interest in a separately traded subsidiary, Caesars Growth Partners, whose holdings include the lucrative Caesars Interactive brand. He’s been working ever since at expanding Crown’s footprint in the larger media world. He’s upped the company’s 50% equity interest in Betfair Australasia to 100%, and expanded into online bookmaking with CrownBet, a majority-controlled partnership with Internet innovator Matthew Tripp’s BetEasy. Earlier this year, he moved into the social gaming space when he spent $27.5 million for a 60% stake in Texas-based DGN Games and has committed another $5 million to support its development. In December 2012, Packer and Hollywood producer Brett Ratner formed a joint venture, RatPac Entertainment, to make independent films and co-produce some bigger-budget ones, the first of which, the outer space thriller “Gravity,” starring George Clooney and Sandra Bullock, was a box office smash. Mr Packer leveraged that success to back the highly publicized short promoting Studio City’s opening that was directed by Martin Scorsese and features Robert DeNiro, Leonardo DiCaprio and Brad Pitt. As for Alon, it will be anything but another pricey Strip big box. It’s designed instead around a collection of intimate spaces, the smallest, at a very un-Vegas-like 50,000 square feet, is the casino itself. The focus will be on entertainment, dining, retail and an upscale hotel offering, two hotels, in fact, one of them a dedicated VIP tower comprising 900 rooms and suites and a select number of separate residences, dubbed “maisonettes,” for the VVIPs. A “black box” theater is planned, with seating for only 500. The shops, on the other hand, will cover a whopping 156,000 square feet, a portion of which will front a 27,000-square-foot lake. There will be a nightclub and day club, staples of today’s Strip, the latter surrounding an 81,000-square-foot pool. Mr Pascal has said Alon will “bring a fresh, new approach to what we think the future of Las Vegas should be.” James Packer intends to be a major player in that future.