Gambling Business: James Packer Won’t Pursue Vegas Again
The sharp as a sharks tooth James Packer has dismissed a return to the the embattled and politically red hot American gaming market. At least, for the near future, but never say never.
The likable executive chairman of Crown Limited issued the statement in the hard to forget aftermath of the firms horrendous AU$3 billion (US$2.99 billion) expansion into the United States before the global financial crisis. You know, the one that George W's leadership saw in, and the same one that Barack Omama inherited.
Crown still holds a modest a 24.5% stake in the Cannery casino group, which operates three pretty decent casinos in Las Vegas and the Meadows Racetrack & Casino in Pennsylvania.
Punters should note that it's strongly written down the investment after getting loose from a full $US1.75 billion Cannery buyout in March 2009, by cleverly reworking the terms of the deal with the group's private equity owners.
"I have had a bad experience in the US, so I am not rushing to go back," Packer said.
"Crown is not a company looking to issue fresh equity and we are already spending more than our profits on our capital expenditure program. That means there is a limit to what you can do."
Cannery wasn't the only not so good experience JP had in Yankee land Crown took stakes in US casino giants Harrah's Entertainment and Stations Casino Group, which it was subsequently forced to write down.
It also has a ridiculously low 1% stake in Canuck (Canadian) group Gateway Casinos & Entertainment, which was also written down.
In 2009 it closed its Vegas corporate offices after tossing aside its once bold plans to build a Crown Las Vegas casino and hotel complex with private equity partner York Capital Management and Chris Milam, a Texan property developer. Insiders reckon you have to watch them Texans, no offence Chris.
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Packer High On Macau Quality, Down On U.S Economy...
Despite continued competition on the Cotai Strip, co-chairman of Melco Crown Entertainment, James Packer is very confident in his City of Dreams property and believes that quality is the thing that will endure in the grand scheme of things.
Packer believes different from analysts who claimed that City of Dreams, which is developed by a joint venture between Packer and Lawrence Ho Yau Lung, has not differentiated itself well enough from its rivals such as media darling, The Venetian Resort Hotel.
While Sands China’s "parcels 5 and 6" consisting of three renowned hotels are being built next door to City of Dreams and Galaxy Entertainment is also due to open its flagship property on the Cotai Strip on May 15, JP seemed not to be too concerned.
"I disagree with the Macquarie analyst. Steve Wynn, whom I know a little bit and respect enormously, gave me a piece of advice once. It was: "Just build things as good as you can and quality will beat out gimmicks over time’," Packer said.
"And that is not to say that The Venetian is not high quality or a gimmick-based hotel, but I am very proud of what we have got up there. Time will be its friend," he added.
'The House of Dancing Water' show that was launched in September last year is another factor that boosts Packer’s confidence in City of Dreams.
He advised the show had lifted December quarter turnover and was drawing a "new breed of clientèle" to the premises.
COD posted a pretty average performance in 2009, but revenues have been improving regardless of its focus on the mass market.
"I think that one of the things that people underestimate is how hard it is to be the sixth player in a market. We started three years after the first five".
Packer also said that he is certain that Macau is the right place for Melco Crown.
"Macau is beginning to work out really well for us. Macau stands on its own two feet on a stand-alone basis, but it also helps us develop new contacts in the region, meet new people, meet new players," he said.
"And it is a great dissemination of our brand. What we are trying to do against some of the biggest and most successful companies in the world is produce a product that is world class," he added.
Packer also stressed out that Macau is "one of the most competitive markets in the world, with a standard of product that is ‑if not the world’s best already - on the way to being the world’s best".
"What has happened in Macau over the past 10 years has been incredible. It is now an incredibly diverse locale, with some of the most amazing facilities in the world," he said.
Global Perspective...
Australia is the 6th biggest gambling nation on Earth, and a number of experts think we may reach the top 3 within the next few years. The U.S is #1, and James Packer and Co and doing their best to see Macau nudge closer to #2. It's times like these that Team Packer is glad they have a global strategy, but clearly the U.S will have to improve somewhat before the likable Aussie buys in to Yankee land again in a financial way. Yanks, don't worry. Us Aussies still love you, but we just don't love your economic situation right at the moment, but with more positive momentum for gambling regulation in the U.S, pushed along by Crown Limited "partners in crime" (friends), PartyGaming, who do a bit of b2b dealing with Packer's Crown when 'Aussie Millions' time comes upon us. Stay tuned, and don't blink for a second.
Macau...
Casino gambling leaped in Macau soared in 2010 to reach a record high, according to official figures. Revenue totalled $23.5bn (£15.2bn), up 57% on the previous year, reinforcing the territory's position as the world's most lucrative gambling market. Earnings have been driven by an influx of gamblers from mainland China. Macau - a former Portuguese colony returned to China in 1999 - is the only Chinese city where gambling is legal. It opened up its gambling industry to foreign competition in 2002, triggering a building boom. In 2007 gambling revenue there overtook that of the Las Vegas Strip in the US. The figures for 2010 were released by Macau's Gaming Inspection and Coordination Bureau. As well as an annual record, gambling revenue also set a monthly record in December 2010 of $2.36bn - up 66% year on the year.
United States Snapshot...
In much of the Unites States casinos are forbidden or tightly regulated. A few places allow casinos, and they have become well-known as centers of legal gambling. Relatively small places such as Las Vegas are best-known for gambling; larger cities such as Chicago are not defined by their casinos in spite of the large turnover.
Las Vegas has the largest concentration of casinos in the United States. Based on revenue, Atlantic City, New Jersey ranks second, and the Chicago region third.
Top American Casino Markets by Revenue (2009 Annual Revenues):
1. Las Vegas Strip $5.550 billion
2. Atlantic City $3.943 billion
3. Chicago region $2.092 billion
4. Connecticut $1.448 billion
5. Detroit $1.36 billion
6. St. Louis $1.050 billion
7. Tunica Resorts, Mississippi $997.02 million
8. Biloxi, Miss. $833.50 million
9. Shreveport, La. $779.65 million
10. Boulder Strip (Las Vegas) $774.33 million
12. Reno, Nevada $715.23 million
15. New Orleans, La. $653.05 million
18. Downtown Las Vegas $523.82 million
19. Laughlin, Nevada $492.51 million
The Nevada Gaming Control Board divides Clark County, which is coextensive with the Las Vegas metropolitan area, into seven regions for reporting purposes. Indian gaming has been responsible for a rise in the number of casinos outside of Las Vegas and Atlantic City.
Greg Tingle is a Special Contributor to the Gambling911.com website and Runs Media Man International, a media, publicity and internet portal development company.
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