Stakes rise in race for gambling revenue

By CNN's Grant Holloway

SYDNEY, Australia (CNN) -- Competition for the billion-dollar revenue streams which flow from the Asia-Pacific region's big-spending gamblers is hotting up as Taiwan prepares to legalize its first casino, possibly as soon as July this year.

And the prospect of the Chinese Government granting an additional three casino licenses for Macau next year, breaking the current eight-casino monopoly held by gaming czar Stanley Ho, is also increasing the stakes.

American and Australian casino companies are vying for the right to build and run the casino on the Taiwanese offshore island of Penghu -- an operation which is expected to attract a substantial portion of the $4 billion gambled each year by Asia's wealthy elite.

Australian billionaire Kerry Packer's Publishing and Broadcasting Ltd (PBL), operator of Australia's giant Crown Casino in Melbourne, is believed to be one of more than 10 gaming operators in the running for the Penghu license.

United States-based Las Vegas Sands Inc is also a contender, having earlier publicly expressed its interest in the Penghu project should Taiwan agree to relax its gaming laws.

Packer's interest could be driven as much by wishing to protect existing revenues as it is to expand beyond Australia's shores.

Asian expansion opportunities

Crown Casino recorded a profit of more than $300 million last financial year, with more than one third of those earnings estimated to come from wealthy Asian gamblers -- many of whom may chose to bet their money closer to home in the future.

PBL would not comment on the Taiwan move this week, but it is understood its executives have been briefed on the Taiwan opportunity by new chief executive Peter Yates, according to Australian newspaper reports Thursday.

Gaming analyst at Salomon Smith Barney Jenny Owen said Thursday she was aware of the Crown application to the Taiwanese government for a license, adding that Crown's growth opportunities in Australia were becoming limited.

"The group would be looking for opportunities to expand and those opportunities are really in Asia," she told CNN.

Owen said the Packer group could also be interested in Taiwan as a way to better position itself to gain one of the three Macau licenses expected to become available in 2002.

Competition already considerable

She said she did not think a Taiwan casino would significantly cannibalize Crown's earnings as there was already considerable competition for the Asian gambling dollar in the Philippines, South Korea, Macau, Malaysia and from cruise ships run off Singapore.

Taiwan's minister of the interior, Chang Po-ya, said in March this year the planned casino would be opened at a five-star hotel complex on Penghu in an effort to boost the economy, attract foreigners, and reduce the huge sums Taiwanese wagered in casinos in Macau, Las Vegas, and the Philippines.

"Of course there will be opposition to this . . . but I think this is something we can do for the sake of an offshore island's development," Chang said. "We hope to follow the Las Vegas development model."