CASINO

Sri Lanka confirms Crown casino-less project; Crown v. Echo in Brisbane

TAGs: Australia, Crown Ltd., Echo Entertainment, James Packer, Sri Lanka

crown-echo-sri-lankaThe Sri Lankan government has confirmed that Crown Ltd. boss James Packer has committed to a $350m entertainment project in the country’s capital Colombo, but it will not contain a casino (at least, not immediately). Deputy foreign investment promotion minister Lakshman Yapa Abeywardena told the Sri Lankan parliament that Packer had partnered with an unidentified local firm on the project, which will include a 400-room hotel, retail shopping, entertainment facilities, restaurants and meeting and convention facilities. The local partner will own a 45% stake in the venture, which is scheduled to open in 2016.

However, in response to questions by Marxist opposition politicians, Abeywardena emphasized that Packer’s proposal was “not a casino business and we have not granted any tax concessions which are adverse to the country.” In March, following reports that Packer had met with government ministers about investing in a casino project, the government pushed to amend the Betting and Gaming Act to offer generous tax concessions to large-scale resort casino projects. Even without a casino, Packer’s project will enjoy tax breaks under the country’s strategic development project classification.

Packer, who has yet to issue a formal comment on the deal, appears to be taking the long view on Sri Lanka’s potential as a casino gaming hub serving India’s gambling masses, much as Caesars Entertainment and MGM Resorts have chosen to establish non-gaming hotel beachheads in China’s Hainan province, just in case the authorities decide Macau’s not big enough to contain all of China’s gamblers. In the meantime, Crown has plenty of real casino projects to keep it busy, including its Belle Grande development in Manila’s Entertainment City (as part of the Melco Crown joint venture).

NEW BRISBANE FRONT OPENS IN CROWN V. ECHO WAR
Meanwhile, Packer continues to stir the pot in his war with Australian rival casino operator Echo Entertainment. Already locked in a bitter battle over Echo’s casino monopoly in Sydney, Packer has now thrown a monkey wrench into Echo’s plans to spend up to $1.3b on a resort casino project in Brisbane. Echo holds the only casino license in Queensland, but on the weekend, Packer told the Courier-Mail that Crown was also interested in Brisbane, regardless of how the Sydney fight turns out.

Cynical onlookers suspect Packer’s true intention is to instill doubt in the minds of Echo investors, who are already concerned over Echo’s latest promise to spend up to $1b expanding its Sydney casino The Star if the New South Wales government will extend its monopoly beyond 2019. Echo only just finished an $870m refurbishment of The Star, for which investors are still waiting to see returns. Echo CEO John Redmond told the Australian Financial Review that investors need to recognize that further “synergistic” expansion of The Star would have a multiplier effect on the casino’s fortunes creating “a situation where you get one plus one equals four.”

A Crown spokesman rubbished Redmond’s logic, saying Echo had “yet to deliver the return on their previous investment” and claimed The Star has “had 17 years to make a significant contribution to Sydney’s tourism infrastructure and has failed dismally.” Crown can afford to rubbish Echo now that it has dumped its 10% stake in its rival. Prior to the sale, Crown had reportedly approached Echo about the possibility of a Sydney joint venture, but Redmond told the AFR he didn’t think a JV with Crown “makes any sense.” You don’t say…

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