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The question Mike Baird could soon be asking James Packer

What if James Packer built a lavish casino in his home town of Sydney, but nobody came?

It's a question on the lips of more than a few people at the moment – the NSW government no doubt among them – as his company Crown Resorts swings into crisis mode over the arrest of 18 staff in China.

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Construction is poised to begin on Packer's 75-storey edifice at Barangaroo on the edge of Sydney Harbour, with a projected opening date of around 2020.

But as speculation mounts the arrests could signal a significant, permanent reduction to the conga line of rich Chinese high rollers Packer and other casinos specialise in attracting, the casino's entire raison d'etre has been thrown into question.

Illustration: Simon Letch
Illustration: Simon Letch 

If the speculation proves founded, it could leave Premier Mike Baird – or whoever has his job – asking Packer in a few years' time: where the bloody hell are they?

Let's not forget that when Packer first put forward his audacious plan in 2012 Sydney had one casino and absolutely no plans to change that.

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International tourism and the boost it would bring the NSW economy was the main reason the state government even entertained the thought of granting Packer a second Sydney casino licence.

As treasurer at the time, Baird declared his enthusiastic support.

James Packer has promised massive tourism benefits for Sydney and NSW from his Barangaroo casino
James Packer has promised massive tourism benefits for Sydney and NSW from his Barangaroo casino Photo: Tyrone Siu

"It's a proposal that is bold for the city, brings a vision in terms of a long-term legacy together with investment, jobs and tourism and I think we should be applauding those approaches," he gushed.

"That sort of innovation, the city has been crying out for."

As treasurer at the time Packer put his plans forward, Mike Baird declared his enthusiastic support.
As treasurer at the time Packer put his plans forward, Mike Baird declared his enthusiastic support. Photo: Wolter Peeters

Crown's push was a prime example of a shift in the marketing of casinos worldwide aimed at making them more palatable for governments hungry for tax revenue and the construction jobs.

From simple casinos they transformed – at least on the glossy pages of the pitch documents – into "integrated resorts" where the focus was as much on the non-gambling offerings of bars, restaurants and high end accommodation.

Central to Packer's pitch to then NSW Premier Barry O'Farrell was the promise of Sydney's first "iconic six star hotel" to attract the cream of cashed up Asian tourists.

"Sydney is yet to capitalise on the opportunities provided by the growth in Chinese tourism, the large Asian VIP gaming market and the many attractions of Sydney for high net worth tourists and VIP players," Crown stated in a 2013 marketing brochure.

This was cleverly aimed squarely at O'Farrell's focus on international tourism as a great driver of the NSW economy. Tourism was the sugar coating on the bitter political pill of a massive new casino.

It went down a treat with the NSW government and thanks to some clever lobbying, the Labor opposition too.

Just how reliant on international gambling business the venture would be was starkly outlined in the unsolicited proposal documents prepared by Crown and the government.

There would be no poker machines, minimum bets - $30 for baccarat, $25 for roulette and $20 for black jack – and VIP-only membership rules.

In other words, this wouldn't be a casino for curious local Sydneysiders to wander into off the street; it would be an exclusive facility for serious globe-trotting Asian gamblers.

The same documents anticipate that based on the experience at Crown Melbourne just five per cent of casino patrons would be locals, with the rest from overseas and interstate.

It's a huge gamble on being able to attract that group of Asian high rollers expected to make up 95 per cent of the business.

There's also significant political risk for the NSW government, which will have egg on its face should the promised Chinese tourism and associated economic boost not materialise.

What would it have left to show for its controversial decision to award Packer a casino licence?

Well, a major selling point for the government was Crown's guarantee of a minimum $1 billion in gambling taxes, including a $100 million licence fee, over the casino's first 15 years of full operation.

Baird this week ruled out allowing poker machines or changing the minimum bet or entry rules at Barangaroo to counter the revenue fall a lack of Chinese high rollers would produce.

But should things go badly, it's a powerful incentive to reconsider.

Sean Nicholls is state political editor.

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