Preliminary talks have taken place between two Australian casino operators over the possibility of sharing the single Sydney licence – or potentially working to establish a second licence for the city.
Currently, Echo Entertainment holds the licence for the Star casino in Sydney, but Crown, which has the casino of the same name in Melbourne and the Burswood in Perth, is seeking an involvement in Sydney. The company has promised to build a huge new hotel resort at Barangaroo, but claims it is not viable without gaming.
It is seeking to use Echo’s monopoly casino licence for the development or seek government approval for a new licence when the Echo monopoly expires in 2019, a year later than the completion of the proposed Barangaroo development.
Crown has a 10 per cent stake in Echo and has sought regulatory approval to increase that to 25 per cent. But the debate has been complicated by the arrival on the scene of Genting, the Malaysian casino operator, which has taken a 10 per cent stake in Echo and is also asking for approval to increase that. Echo has admitted that ‘preliminary talks’ have also taken place with Genting.
Against this background, Echo reported a major fall in annual profits. Gross revenue was up 2.5 per cent to A$1.69bn (US$1.76bn) but net profit fell 81 per cent to A$42.2m (US$43.9m). The cause was said to be writedowns on its VIP business, softening consumer attitudes and a scandal surrounding the departure of its Star casino chief Sid Vaikunta. Echo has spent A$870m (US$906m) on improvements and renovations to the Star and expects this to pay dividends in the next year.
Echo also owns the Conrad Treasury, Jupiters and Conrad Jupiters casinos in Queensland.
