Crown rolls the dice in new Manila venture

Macau has overtaken Las Vegas as the world’s largest gambling hub. Source: Supplied

The two actors have taken part in a short film made by director Martin Scorsese to promote the $US1.3 billion ($1.67bn) City of Dreams casino — Packer’s first Asian move outside Macau — which will be shown as part of the gala opening.

The new up-market casino hotel complex in The Philippines provides an important avenue for diversification for the NASDAQ listed Melco Crown Entertainment which has been focused on the former Portuguese colony of Macau.

While Macau has overtaken Las Vegas as the world’s largest gambling hub, with a turnover of $US45bn last year, its future is clouded by concerns about the slowing Chinese economy and President Xi Jinping’s crackdown on corruption which has seen a new restrictions on mainland ­Chinese travelling to the city.

Today’s opening also comes as Crown’s hopes to expand into Sri Lanka have been squashed as a result of a change of government and there are increasing questions about its potential to enter the potentially lucrative Japanese market which is still closed to foreign casino operators.

Packer’s Crown is also waiting to hear about its bid for a casino licence in Brisbane while its $2bn casino project at Barangaroo in Sydney is expected to open in 2019.

The ASX-listed Crown has 33.6 per cent of Melco Crown Entertainment, a joint venture between Packer and his Hong Kong-based partner Lawrence Ho, son of Macau’s ageing casino billionaire Stanley Ho.

The City of Dreams Manila, which is being built in connection with Belle Corporation, owned by The Philippines’ richest man, Henry Sy, is the second hotel/casino to be opened in Entertainment City in Manila Bay, a hotel/casino precinct which the country hopes will challenge Singapore and Macau.

The first, the smaller Solaire, owned by Philippines ports tycoon Enrique Razon, was opened in 2013.

Packer has described the City of Dreams Manila as being a “a bet on The Philippines and a bet on China.”

Unlike Macau, where few ­locals gamble, the Manila casino will be hoping to attract up-­market locals as well as high-­rollers from China and other parts of Asia.

The Manila casino market turned over an estimated ­$US2.2bn last year.

Asian casino analyst Sudhir Kale, who is also a professor of marketing at Bond University, estimates that Manila’s casino ­revenues could more than double to $US4.5bn in the next three to four years as Entertainment City takes off as an up-market gaming destination.

In an interview with on Friday, Kale said that The Philippines was also attractive for Packer and Ho as it had a tax rate of only 15 per cent on gambling revenues compared with the 39 per cent charged in Macau.

“The Philippines will be a smaller market than Macau but it will be the fastest growing market in Asia over the next four to five years,” he said.

“The Philippines market could grow at a compound annual rate of between 15 and 17 per cent whereas Macau might only do eight to 10 per cent.”

Kale said that Packer’s financial investment in Manila was much smaller than in Macau where Melco Crown owns the $US1.5bn City of Dreams, on Macau’s Cotai Strip, a small casino called Altira, and is set to open the $US3.2bn Hollywood inspired Studio City hotel, gaming and entertainment complex nearby later this year.

He said that the inclusion of several up-market hotels such as the 260 room Crown Towers, the 321 room Nobu Hotel and a Hyatt could provide significant non-gaming revenues.

Melco Crown already has strong connections with Asian junket operators who bring in the VIP gamblers.

While mainland Chinese high rollers can gamble in nearby Macau, Kale said that Manila ­provided another option which could also become more attractive if there was a crackdown on mainland Chinese gambling in Macau.

“VIP players who don’t want to be seen gambling in Macau can go a bit further afield to Manila,” he said.

The City of Dreams Manila will cater to both VIP and mass market gamblers with 380 gaming tables, 1700 poker machines and 1700 electronic table games.

Source:  The Australian - 2 February 2015