James’ Crown expands and expands and expands!

by Andrew W Scott

James Packer has made no secret of wanting to divest himself of media and focus on gaming. With the opening of Crown Macau last month, and Friday’s announcement that Crown will be expanding the franchise to Las Vegas, he is moving into the world’s top two casino markets.

And while he’s at it why not build the tallest building in the world? Yes, that’s right, the proposal for Crown Las Vegas includes an 1,888 foot, 142 floor hotel tower. But Las Vegas Gaming Control Board Chairman Dennis Neilander said Packer has yet to apply for a gaming license, adding that he recommends that new applicants apply a couple of years ahead of taking over gaming operations.

Packer is really taking no risk with the Macau venture, which he opened in partnership with Lawrence Ho, son of long-time Macau casino mogul Stanley Ho. Since Macau has been opened up to gambling competition, it has seen a stupendous boom in gambling. In the four years from 2002 to 2006, annual gambling losses in Macau's casinos increased 255% from US$2.59 billion to US$6.61 billion. It was widely reported last April that Macau had overtaken Las Vegas as the world's biggest casino location. Analysts and journalists jumped the gun, fudging the figures by only counting the Las Vegas strip casinos (neglecting downtown and North Las Vegas casinos), and also by lumping non casino gambling losses in with the Macau figures. Macau's 2006 total casino win was “only” US$6.61 billion, and the real Las Vegas figure (including Downtown and North LV) was US$7.63 billion.

However, with the release last month of the March figures for Las Vegas, the magic milestone has been achieved, on the official figures, in the first quarter of this year. The total Q1 win of all Las Vegas casinos was $1.96 billion. Macau eclipsed this number like a group 1 filly past a tired old nag down the back straight, taking an incredible US$2.15 billion from gamblers. Where is all this money coming from? Well, Macau is the only place in “communist” China where gambling is legal. Go to any casino in the world to find the racial profile of a big chunk of the world’s gamblers.

The following table gives some idea of Macau’s meteoric rise. It is all the more spectacular given there is much suspicion of systemic under-reporting of the Macau win, fuelled by a high level of Government tax on casino winnings.

© 2007 Andrew W Scott