Michael Pascoe has a good article in the SMH on the awarding of a casino license to James Packer’s Barangaroo development. Casinos are in this sense like taxis and pharmacies. The Government regulates the number, rather than simply specifying minimum standards. So Packer will enjoy a cosy duopoly with Star Casino. As Pascoe writes
If logic was allowed into this structurally dubious situation, the arguments advanced by Packer for granting his Barangaroo licence would mean multiple new casinos should be permitted. If it’s all about plundering mug Chinese tourists, more and competing casinos would lure many more punters and provide a better product. Vegas and Macau haven’t become tourism centres because they have just two casinos. …
But in the great tradition of Australian capitalism, the last thing any big player wants is genuine competition. A monopoly is the ideal, but in field after field, it’s shown a cosy duopoly functions nicely.
My guess is that, given a choice of a rational casino policy and the existing monopoly, Packer would ditch his second licence idea in favour of the monopoly and one way or another come up with the readies to acquire Echo or its Star casino. …
Having decided that it is desirable to have a casino, there is no logic to artificially limiting the number of them. The role of government should be to determine its tax take, set the necessary probity standards and rigorously enforce them. The market then decides the viable number of operators. And all those glittering jobs and opportunities promised by Packer’s television ads can be multiplied.
Before the holy and righteous mount the barricades over such a suggestion, the bigger hypocrisy should be acknowledged: Sydney already has an army of casinos marching out through its heartland, we just chose to call them clubs, supported by the pokie-dependent pubs. The difference between a roulette wheel spun by a dealer and computerised roulette operated by a button is only a matter of aesthetics and operating expense.
New South Wales rejoices in being the state of the biggest losers in the nation of biggest losers.
The Packers are an innovative lot, although they have been very careful to build their fortune on the back of Government favours – usually to keep competitors at bay.
Kerry Packer sold the Nine Network to Alan Bond for $1.05 billion in 1987 and bought it back three years later for $250 million, saying
You only get one Alan Bond in your lifetime, and I’ve had mine.
Kerry was an inveterate gambler, famed for his generous tips and high stakes. On one occasion he was playing in Texas in a high stakes game and a Texan walked in and demanded to sit at the table, saying he was a multi-millionaire worth $20 million. Kerry Packer reportedly said
I’ll toss you for $20 million
Of course James Packer sold off Nine again in 2006 to focus on PBL’s gambling interests. James prefers to own casinos rather than play in casinos.
But Kerry and James (and before them Frank) all had the gambler’s instinct of being able to defeat their opposition by bluffing. No government has yet had the courage to call and see whether they are holding a straight flush or a busted hand. Perhaps Kerry has bluffed St Peter into handing over the keys to the pearly gates?