James Packer’s $4 billion gamble in Macau, the Hollywood-themed Studio City complex, has already paid its first dividends with Melco Crown Entertainment.
Macau, known as the world’s biggest gambling hub, has already hit an annual low not seen since 2010, following the China government’s relentless crackdown on corruption. The city state’s monthly gaming revenue for December came to MOP 18.34 billion (US$2.3 billion), marking the 19th straight month the city’s gaming revenue has reported a year-on-year shortfall.
The Australian billionaire, however, wasn’t deterred by Macau’s gloomy prospects.
Packer’s Crown Resorts, which has a 34 percent stake in Melco Crown Entertainment, wagered that its newly-opened Studio City complex would help reverse the city state’s stagnating gaming industry by focusing on mass market gambling and family-friendly entertainment.
Two months of trading later, Melco Crown’s market share has jumped to above 16 percent from 13 percent in October, The Sydney Morning Herald reported.
The news outlet quoted Bernstein Research analyst Vitaly Umansky, who said: “Since Studio City opened in late October, Melco Crown has grown its market share to above 16 percent level versus historically around 13 to 14 percent.”
According to Bernstein Research estimates, Studio City generated MOP 343 million (US$60 million) from mass table gross gaming revenue in December. This is despite the fact that the casino was only allowed to operate a maximum of 250 new-to-market gaming tables and 1,233 new gaming machines at the Studio City gaming areas.
Under the city government’s rules, only 200 gaming tables and 1,233 gaming machines were in place when Studio City opened. The remaining 50 tables were could only be in operation starting January 2016.
Melco Crown CEO Lawrence Ho had hoped to get 400 tables for the newly-opened casino. Still, Melco’s table allotment is superior to the 150 gaming tables that Galaxy Entertainment Group was originally allocated for its Galaxy Macau and Broadway Macau casinos, which opened in early 2015.
Packer have been instrumental in Crown Resorts’ partnership with Melco, but the Australian businessman has all but cut ties with the casino giant that he has helped build. A few days before Christmas, the casino mogul announced that he is stepping down “effective immediately” from his position as director of Crown Resorts Ltd.
The move cuts the businessman’s influence over the company that makes up “the vast majority” of his wealth. Packer said he now plans “to devote my energies to a number of key development products in Sydney, Melbourne and Las Vegas as well as Crown’s online platforms.”