Packer reins in casino empire plans after China crackdown


SYDNEY: Casino billionaire James Packer scrapped plans for a gambling empire spanning the world’s largest gaming markets after a clampdown by authorities in China and unpredictable returns in Macau.

Retreating to Australia, Packer’s Crown Resorts Ltd yesterday abandoned a proposed spin-off of international assets and instead halved its stake in Macau casino operator Melco Crown Entertainment Ltd.

Melbourne-based Crown is also considering selling an undeveloped plot in Las Vegas and will now focus on its casinos in Australia, led by a proposed A$2bil (US$1.5bil) high-stakes, luxury resort in Sydney.

“This is all about risk management,” said Theo Maas, who helps oversee about A$3bil in assets including Crown shares at Sydney-based Arnhem Investment Management. “You’re now looking at a much more predictable business with a much stronger balance sheet.”

Even so, the new focus on Australia is not without danger. More than a third of Crown’s revenue at its Melbourne and Perth resorts comes from international visitors, predominantly mainland Chinese, and they will be the mainstay of the planned Sydney resort.

The round-up of 18 Crown staff in China in October for alleged gambling crimes has raised questions about the company’s ability to draw in Chinese high rollers.

Amid the detentions in China, turnover from Crown’s programme for high-wagering, top-priority customers at its Australian resorts slumped 45% from a year earlier in the most recent 23-week period, Crown said.

The clampdown, which captured Crown’s head of international high-roller operations Jason O’Connor, sparked concern of a renewed crackdown in China on overseas casino operators trying to woo citizens overseas to gamble.

The overseas spinoff was designed to isolate Crown’s Australian casino business from its Melco Crown investment, which was infected by a two-year gambling downturn in Macau.

The merits of creating such a separate business were undermined by a nascent gaming recovery in Macau.

Rather than make its Melco Crown holding the centrepiece of a newly listed business, Crown will sell a 13.4% stake to Melco International Development Ltd to raise A$1.6bil. Packer will step down as deputy chairman, giving full control of Melco Crown to Lawrence Ho, Melco International’s chairman and chief executive officer.

The sales comes as Ho, the billionaire son of gaming tycoon Stanley Ho, has ambitious plans to enlarge the company’s international footprint, with casinos and hotels in the Asia region and beyond. – Bloomberg

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Business , James Packer , gambling

   

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