In a surprise move, Echo Entertainment is offering to compromise on its Sydney casino monopoly as part of a deal that will allow rival Crown Limited to build a high-rollers casino in Australia’s largest city.
ASX-listed Echo, which operates The Star casino on Darling Harbour under an exclusive license good through 2019, has been trying to block Crown and its billionaire Chairman James Packer from gaining approval for a competing resort on waterfront land across the harbor that is slated for development by the city.
Echo has offered the government of New South Wales A$250 million in cash to preserve the monopoly and last week submitted plans to invest a further $1.1 billion in The Star, 90% of it on “non-gaming attractions,” including two luxury hotels, more than 50 new restaurants and bars and a bridge and roadway connecting various points along the harbor.
ASX-listed Crown, which operates resort casinos in Melbourne and Perth, is lobbying the state to dismantle the monopoly so it can build a VIP casino targeting wealthy Asians as part of a $1 billion complex on the harbor that includes a 60-story hotel, luxury apartments and other amenities.
The state has said only one of the projects will be approved and has submitted both to an independent panel for its recommendation.
Echo’s new alternative is for The Star expansion to proceed alongside the Crown project, provided Crown limits the casino component to a VIP-only venue. Echo also would forego the $250 million payment.
“While Echo is confident that our proposed development plus licence exclusivity payment provides the most impactful solution, this alternative may be seen as a potential win-win scenario for the people of Sydney,” said Echo Chairman John O’Neill.
There was no comment from Crown on the offer, according to news reports.
Crown initially attempted to wrest control of Echo and the monopoly from the inside, buying up 10% percent of the stock last year and applying for regulatory permission to increase its holding to up to 23%. That permission was granted in May, but Crown then sold the shares, wreaking havoc with the price in the process, in a move that analysts have interpreted as Mr Packer’s confidence in his competing bid.
Malaysian resort conglomerate Genting owns 6.6% of Echo and has applied to increase its stake.
