Australian Casino Wars: Tabcorp No Casualty (Yet), by Greg Tingle - 9th August 2010

Australian casino wars continue on as Tabcorp defends its position to further invest into its Star City Casino based in Sydney, Jupiters Hotel and Casino on the Gold Coast, Conrad Treasury in Brisbane, Queensland, and whispers of another casino or two in the works. Crown Limited's casino James Packer may be sailing the high seas abroad in his Arctic P vessel, but rest assured this army generals, chief of staff, second lieutenant and the like are in the war room plotting as the 'Art Of War' continues. Media Man and Gambling911 on the battlefield... ah, incoming!...

Tabcorp Holdings told the press it is gradually becoming a casino company to take advantage of favourable regulatory conditions and boost its bottom line.

Tabcorp chief Elmer "Funky Fudd" (affectionate satire tag) Funke Kupper told ABC TV's Inside Business program on Sunday that casinos would play a larger role as a consequence of the way the business was structured.

Funke Kupper said significant investment in its New South Wales casino business was expected to generate a return of approximately 14 to 15% and eventually comprise 50% or more of the firm, while gaming would fall to roughly 22% of the company.

"In Victoria, the licence would fall away in 2012. That will make gaming a smaller part of our business and at the same time we're making very significant investments in our casinos business," he told the press.

"We're doing that because that's where we have the right conditions - long-term licences, attractive markets and opportunity for growth. So the outcome is that we'll become more of a casino business as a result of the investments that we're making."

This past Thursday, Funke Kupper attributed Tabcorp's lower normalised net profit on weak gaming market conditions in Victoria and Queensland. Competitor Crown Limited isn't talking up the "week gaming market conditions" as much as Tabcorp according to a number of Asia Pacific based analysts.

Tabcorp booked a 10% fall in reported net profit for the 2010 financial year to $469.5 million, down from $521.7 million in the prior year.

Normalised net profit, which takes into account variations in the win rate against high-rolling gamblers, was down 3.8% at $477.3 million.

Tabcorp also announced it would spend an extra $285 million on the redevelopment of Star City, boosting total capital investment on its Sydney casino to $860 million, up from $575 mill.

Funke Kupper said the addition to Star City Casino of a 3000-seat, multi-purpose entertainment venue for major events, conferences and exhibitions plus VIP customer facilities would fulfill the total potential of the market.

The entertainment venue would generate traffic (people - likely not internet) and a brand that would work for the entire casino, he said.

"It will be OK in its own right but, of course, the profitability of things like gaming is higher. What we're creating here is not an events centre; what we're creating is an entertainment destination, and if you look at the size of Sydney relative to any other market in this country, it's by far the biggest market, and if you look at what other casinos are investing, an investment of close to a billion dollars actually makes sense."

Funk Kupper said VIP investment was warranted because it was a high-growth market with untapped potential.

"With the infrastructure we're building at Star City, we have the opportunity to offer the right product to that consumer so we think the business case for that is actually the easiest one out of all the things that we're doing, given the attraction of Sydney, the property that we're building and the size of that market."

Queensland Government To Allow More Poker Machines?...

The Queensland Government is under missile attack also. Not by casinos, but by anti gambling and gaming campaigners (not again we hear you sigh). The heat...policy towards poker machines apparently.

Tabcorp is of course plotting and planning to expand its casinos in Queensland, including Brisbane City, but it the acquisition of 1,000 gaming machine licences is part of its 'Art Of War' war chest... a not so secret weapon. It involves Tabcorp purchasing existing licences from pubs and clubs. World Vision Australia (a god - religion based charity) chief exec Tim Costello has been lobbying hard against poker machines for years. The man of God says Queensland has an oversupply, with 47,000 machines compared to Victoria's 30,000. "It's because your Government has been able to slip them in under the radar rather than raising taxes ... almost certainly without telling the public that pokies, after drugs, are the second source of crime at the Victorian Justice Department report," he said. Treasurer Andrew Fraser says the Government has yet to decide whether to permit the trading of licences between the casino industry and pubs and clubs.

"By no means are we as a Government saying that that's something that we are endorsing. But it is something that we've said we'll talk to the clubs and hotels about - what does this deliver? It means no net new increases in poker machines but it does mean the potential for significant tourism redevelopment on the Gold Coast and also a brand new five-star hotel in Brisbane."

For the record team Media Man believes in God and Jesus, but is not in a bible bashing type sector.

A Media Man International spokesperson said "Media Man is spiritual and believes in God, but doesn't let it dirty the water with politics and law. MM is more into sharing wealth... sort of like a Robin Hood... from the rich, to the poor. Helping spread funds across society. The gaming industry has remained one of the most recession resistant sectors of the 12 we cover. Our friends at Crown Limited and Tabcorp are also weathering the storm better than many also. State and Federal government also appear to have seen the light. Little wonder that land based casinos are starting to integrate more igaming and online elements into their operation - its the future".

This past Friday Tabcorp shares closed 10 cents lower, or 1.5% at $6.66 (superstitious readers may note that a variation on the "devils number". Aussie Mark 'The Turkey' Webber got #6 off pole position in last weeks F1 race, but went on to win. 6 - a good or bad omen?

Media Man Profiles


Star City Casino

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Jupiters Hotel and Casino

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The Late News...

Crown Casino and Burswood Entertainment Complete budgets likely to further open up, partly in response to aggressive moves and counter strike by Tabcorp. City Of Dreams, Macau, part of Packer's holistic approach. More world class events planned for City of Dreams and Crown, adding to total entertainment experience. Crown playing cards right with Australian government powers that be and further online strategy in the works. Crown aware of public's online gaming wish list. PartyGaming and IGT online games on radar of Crown Limited. PartyPoker b2b online poker satellite qualifiers likely to start again circa November 2010, ready for January 2011 'Aussie Millions'.

Readers, know the odds, bet with your head, not over it, and have fun. And that's an order, Sergent Slaughter. Stand at ease soldiers. Speak easy.


Tabcorp $6.66

Crown Limited $8.090

Tatts Group Ltd $2.41

Centrebet $1.375

Aristocrat Leisure Limited $3.670

Media Man Profiles


Star City Casino

Crown Casino

Tabcorp Holdings

Australian Casinos

Aussie Millions



Wrap Up...

Readers, do you think Tabcorp are doing the right thing by investing so much money in their Australian casinos? Who will win in the Tabcorp VS Crown Limited war? Tell us in the forum.

More background on the Australian Casino Wars...

'Australian Casino Wars: Casualties Upcoming?'

Readers, another friendly reminder...know the odds, bet with your head, not over it, and have fun.

*Greg Tingle is a special contributor for Gambling911

*Media Man http://www.mediamanint.com is primarily a media, publicity and internet portal development company. They cover a dozen industry sectors including gaming.

*The writer owns shares in Crown Limited

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