Inside Asian Gaming

INSIDE ASIAN GAMING | July 2013 10 state law requires of so-called “unsolicited projects,” which means negotiating a binding offer with the government and obtaining the aforementioned approvals. It will cost Crown an up-front payment of $100 million to get the ball rolling. It also means Sydneysiders finally are going to get their say, and that could prove lively. For Mr Ackland at the Herald , “Harnessing economic growth to gambling is such a hackneyed, failure-ridden experiment that it’s a wonder it’s being seriously entertained in this city.” A grassroots petition is being circulated online opposing Crown Sydney, abetted by the likes of Alex Greenwich, an Independent for Sydney in the NSW Legislative Assembly. “Public submissions were not sought, there was no community debate and massive community opposition was ignored,” he says. “I asked for terms of reference and they were not forthcoming with that. The government has rushed every step of this process and they have changed the rules constantly.” Greens MP John Kaye has been rather more blunt, calling it a “sham and the outcome a disgrace”. Defending the government’s decision, Mr O’Farrell said, “The decisive factor was the opportunity to introduce competition into the market. … Sydney was falling short of its potential share of the growing international gaming and tourism market and has underperformed compared with Melbourne.” He has an argument. In the decade up to 2011, Victoria grew its share of Australia’s total inbound visitation by 8% while New South Wales’ fell by 7%. The gaming comparison isn’t entirely fair, though. Crown Melbourne has three times more hotel rooms than The Star and 1,000 more machine games and far fewer pub and club slots competing for business. There are some 515 venues with machines games operating in Victoria, where total devices are capped at 30,000, versus more than 3,000 locales in New South Wales, where up to 99,000 devices are allowed. Crown Melbourne has 60% more table games than The Star and therefore more capacity to serve high rollers. VIP accounts for about 30% of Melbourne’s total gaming revenue. It’s around 19% at The Star. Critics, however, point out that if the government was serious about competition it would have opened the market to outside bidders, as Macau and Singapore did, or at least hold a tender for the second license. “What Sydney gets from this chronically flawed process won’t be what David Murray’s committee outlined,” wrote Michael Pascoe in Business Day . “All that really happened was Echo’s Star monopoly being bumped into a ditch.” But that hasn’t entirely been settled either, according to David Green, a former regulator in South Australia who heads the gaming practice at Newpage Consulting, based in Macau. “The New South Wales auditor-general has already said tender rules do apply. The AG reports to [the Legislative Assembly] directly. So it’s a very important position. And the government will be careful not to appear to buck it. I think it’s the reason why the advisory panel was set up, to see whether the government can entertain an unsolicited bid without going to tender.” Supporters, on the other hand, point to the fact that no one else is stumping up $1.5 billion for tourism development in Australia’s largest metropolis, which has seen only one new five-star hotel since the turn of the century (Echo’s The Darling at The Star, ironically enough). That’s why Patricia Forsythe, executive director of the Sydney Business Chamber, calls Crown’s approval a “clear winner” for the city, and Ken Morrison, who heads the Tourism & Transport Forum, a national private-sector think tank, calls it “great news”. “What we need in this city is a new tourismmagnet,” he said, and “The decisive factor was the opportunity to introduce competition into the market. Sydney was falling short of its potential share of the growing international gaming and tourism market and has underperformed compared with Melbourne.” — New South Wales Premier Barry O’Farrell “If you look at markets that have been liberalized, the liberalization process tends to grow markets over restricted-supply markets, and Sydney is restricted in terms of table supply.” — David Green, Newpage Consulting COVER STORY