In this regular feature in IAG to celebrate 17 years covering the Asian gaming and leisure industry, we look back at our cover story from exactly 10 years ago, “The Star war”, to rediscover what was making the news in June 2012!
A decade is a long time in the gaming industry, and there is no better example of this than events currently unfolding in Australia. In case you’ve been living under a rock these past few years, Australia’s two largest casino operators – Crown Resorts and Star Entertainment Group – are in the midst of massive upheaval following a series of explosive inquiries that has brought into question their relationship with Asian junket operators, the provision of funds to high rollers and their general risk oversight, among other issues.
The fallout has not only claimed a number of high-profile scalps but put an end to Crown and Star’s junket businesses, with Star also announcing as recently as 9 May 2022 that it was suspending its international and domestic rebate programs.
That’s in stark contrast to the events of 10 years ago, when the battle to lure Asian VIPs was reaching a crescendo – as described in detail in IAG’s cover story from June 2012.
Long before Crown and its major shareholder, James Packer, reached an agreement with the NSW state government to build a high-end casino (Crown Sydney) to specifically target these VIPs, the then-44-year-old had his eyes on The Star Sydney – having recently acquired a near-10% stake in Star’s parent company, Echo Entertainment (now Star Entertainment Group).
The trigger, IAG reported at the time, for this acquisition was believed to be completion of an AU$870 million (US$621 million) facelift of the Sydney property, placing it in direct competition with Crown in providing an attractive destination for high-rolling Asian gamblers.
As reported by IAG at the time, the VIP trade in Australia generated AU$24.7 billion (US$17.6 billion) in turnover in 2010 and was growing at double-digit rates annually.
UBS estimates also suggested that the Australian VIP market might be worth up to US$100 billion in turnover by 2014, driven by visitation from China that was expected to hit 16 million.
“Eighty percent of travelers out of China end up going to a gaming venue on their first trip,” added PWC Sydney’s David Waidsowski. “With the recent renovations at The Star, they are trying to do as much as they can to attract as many as they can.”
Desperate to claim as much of this pie as possible, Packer was in 2012 seeking permission to increase his stake in Echo from 10% – the most allowed under NSW law without the express permission of the regulator – to around 23%. But his plans would quickly change.
Despite gaining regulatory approval in May 2013, Packer would instead sell off his entire Echo stake, with Crown instead pursuing plans to develop its own US$1.6 billion Sydney property at Barangaroo. Now fully built but with a casino that is yet to open due to the findings of the inquires mentioned earlier, one can’t help but wonder how history might have unfolded had both companies known the problems that would ultimately befall the VIP sector in Australia.
