A buyout would be a relief for shareholders who have watched their investment shrink by a third in two years as a Chinese corruption crackdown hits gambling revenues in Macau.
Crown is exposed via a one-third stake in Melco Crown Entertainment Ltd, which operates City of Dreams and other properties in Macau, the world's biggest gambling hub.
The Australian newspaper said Packer, who owns 53% of the A$8 billion (US$5.8 billion) firm, was in talks with US private equity giant TPG Capital Management LP and unnamed pension funds about the possibility of taking Crown private.
A TPG spokeswoman denied that the private equity firm was involved in the discussions.
Citing unnamed sources, Bloomberg said Packer's unlisted Consolidated Press Holdings Pty was in discussions with financing partners about returning some of Crown's casino assets to private ownership.
A Crown spokesman was not immediately available for comment.
Following the reports, Crown shares rose as much as 14% in Sydney trading, their biggest gain in a single session. They hit a four-month high of A$12.23. Melco Crown shares were up 2.5%.
For Packer, a buyout would allow him to ride out the Macau downturn which has seen gambling revenue fall for 18 months straight.
"We think (Crown) is pretty undervalued, and as a proprietor it looks like he has the same view," said Morningstar analyst Brian Han. "It has a lot of forward expansion projects in the pipeline and the balance could be stretched, but on the other hand, Macau will come back."
The move would round out a year of change for Packer's relationship with Crown, the media company he took over from his late father in 2005 and transformed into a multinational gambling chain.
In August, Packer unexpectedly quit as chairman without giving a reason.
A Nov 10 filing to the Australian Securities Exchange showed Packer bought nearly 22 million Crown shares, worth about A$260 million at the time. - Reuters