More than a decade ago, over dinner at an exclusive Los Angeles restaurant, James Packer watched his late father and Las Vegas casino magnate Steve Wynn haggle over how much Kerry Packer could wager on a single hand on his next visit to Sin City.
Wynn won the argument, limiting Packer to USD 250,000 a hand because he knew the notorious hit-and-run whale could get on a streak, as he famously did at the MGM Grand one weekend in 1997, reportedly taking the casino for at least USD 20million playing baccarat.
But while Kerry Packer won his battles betting against the house, James Packer has clearly decided that it is the house, in the end, that wins the war.
And so the 40-year-old’s Crown group yesterday moved to buy a bigger piece of the house, paying USD 1.75 billion (AUD 2billion) for three modest, downscale but successful casinos – known in the trade as „locals“ – in Las Vegas and a casino at a racetrack in Pittsburgh.
Since Kerry Packer’s death on Boxing Day 2005, James Packer has sought to move out from beneath his father’s oversized shadow by shifting the focus of the family business from media to gaming.
He has sold down Publishing and Broadcasting’s interest in his father’s beloved Nine Network to just 25 per cent and poured the funds into an expansion of the Crown casino empire inAustralia, Macau, Britain, Canada and now the US.
Last week marked a formal split of the stock market-listed PBL into a gaming business, Crown, and a media investment company, Consolidated Media Holdings, which owns the stake in Nine.
Yesterday’s acquisition of Cannery Casino Resorts – whose principal, Bill Paulos, was hired by Kerry Packer to run Crown in Melbourne when it first opened in the early 1990s – comes a week after a major hurdle in building the proposed USD 5 billion Crown Las Vegas complex was cleared.
The upscale project’s proposed centrepiece, a 576m tower – which would have been the tallest structure west of the Mississippi River – was rejected because of concerns for air traffic, but government officials have approved revised plans for a 324m tower.
Mr Packer is a 38 per cent investor in that project, which includes residential and commercial properties, with Texas developer Chris Milam and York Capital Management, a New York private equity firm, and Crown will operate the casino.
In April, Mr Packer invested USD 250 million in the neighbouring Fontainebleau Resort, a USD 2.8 billion development scheduled to open in 2009, which insiders call a shrewd move considering the neglected north end of the The Strip is now a centre of activity. However, according to the Nevada Gaming Control Board, Mr Packer has yet to apply for a casino licence.
The board’s chairman, Dennis Neilander, has already indicated that he would be looking very closely at Mr Packer’s partners, specifically Lawrence Ho, son of the colourful Macau gaming identity Stanley Ho.
Mr Packer and Lawrence Ho jointly opened the USD 540 million Crown Macau Casino earlier this year. Stanley Ho has repeatedly denied allegations of links between his casinos and organised crime activities, including money laundering, drug trafficking and prostitution. In March, MGM Mirage, one of the biggest casino operators in the US, was dragged before the Nevada Gaming Control Board to explain its relationship with Stanley Ho’s daughter, Pansy, in Macau.
Gaming analyst Bill Lerner, of Deutsche Bank, told The Australian that while Mr Packer should get a licence, his difficulties stem less from his partnership with Lawrence Ho than with his dealings with junket operators – agents paid by casinos to bring high-end gamblers to their properties – in Macau.
„Some of these guys, let’s say, might have trouble passing muster here in the United States,“ Mr Lerner said.