Crown Ltd. (CWN), the gaming company controlled by billionaire James Packer, moved a step closer to developing a A$1 billion ($912 million) casino in Sydney, beating a rival proposal from Echo Entertainment Group Ltd. (EGP)
Crown’s plan for a hotel and casino complex west of the city’s main business district will proceed to the third stage of a government approval process, New South Wales state premier Barry O’Farrell said today. The plan was superior to Echo’s proposal for a A$1.1 billion redevelopment of its existing Star Casino with two new hotels and more than 50 bars and restaurants, the state government said.
Shares in Echo fell as it faces losing its monopoly as Sydney’s only casino operator. Crown and Echo are competing for tourist dollars from high-rolling Asian gamblers who’ve doubled Macau’s gaming revenues over the past three years. Adding a second casino in Sydney would undermine the long-term viability of Echo’s existing Star complex, Chief Executive Officer John Redmond said in an April 8 interview.
“The decisive factor was the opportunity to introduce competition into the market,” O’Farrell said in an e-mailed statement. An independent committee appointed by the government found “a competitive casino market would deliver increased tourism and broader economic benefits for New South Wales.”
Echo shares fell 4.3 percent to A$2.91 at 1:05 p.m. in Sydney before trade in the securities was halted. Crown shares were halted at 12:55 p.m. ahead of the announcement, when they were up 2.2 percent at A$12.21.
The government said it will move to stage three of the approval process provided that Crown agrees to an upfront license payment of A$100 million and a number of other conditions, including that the total license fee and gaming tax payments made to the government over the first 15 years of operation exceeds A$1 billion.
The independent committee found that the Crown proposal, which caters only for high-rolling gamblers, would increase gross state product by A$442 million a year in 2025.
To contact the reporter on this story: David Fickling in Sydney at dfickling@bloomberg.net
To contact the editor responsible for this story: Stephanie Wong at swong139@bloomberg.net
Packer’s Crown Beats Echo Over $912 Million Sydney Casino Tower
An artist's impression of Crown Ltd.'s Crown Sydney Hotel Resort, left, designed by Wilkinson Eyre Architects, is seen in this handout image released to the media on May 16, 2013.
An artist's impression of Crown Ltd.'s Crown Sydney Hotel Resort, left, designed by Wilkinson Eyre Architects, is seen in this handout image released to the media on May 16, 2013. Source: Crown Ltd. via Bloomberg
Packer’s Crown Beats Echo Over $912 Million Sydney Casino Tower
The Star casino, operated by Echo Entertainment Group Ltd., stands in Sydney.
The Star casino, operated by Echo Entertainment Group Ltd., stands in Sydney. Photographer: Ian Waldie/Bloomberg
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