Casinos go through back door to exploit weakness
Both Echo and Crown are seeking to exploit the weakness of the "unsolicited proposals" route to gaining government favour, a process totally unsuited to handing out an exclusive gambling licence, whatever legal euphemism Premier Barry O'Farrell might apply to it. Just as Crown is trying to use the unsolicited proposal loophole as a way of gaining a casino licence through the backdoor, Echo is trying to cement its casino licence monopoly via a rear entrance. A cynical soul might also think Echo's offer to spend another billion around Pyrmont is the Echo board trying to increase pressure on Crown to use the front door via an expensive takeover offer, while Packer awaits permission from authorities in Queensland and NSW to increase Crown's present 10 per cent stake.
The Crown and Echo unsolicited proposals are limited options. What's totally missing from this embarrassing saga of political ire (the Star's recent unhappy history) and favouritism ("all the way with Jimmy") is any inkling of the government considering for a moment what might actually be best for Sydney and NSW taxpayers.
If a resource is scarce, either naturally or artificially, it is the responsibility of government to work out the optimum use of it for the greater good.
There's no sign of the O'Farrell government wanting to bother its woolly head about what the optimal policy for gambling licences might be - it's much easier just to sit back and wait for a couple of big, rich gambling houses to set a simple red-or-black choice for you.
In a state awash with poker machines and Tom Waterhouses, another casino licence - or several - hardly matters. What O'Farrell should be doing is the hard work of making a decision about what the "right" number of licences should be and then standing back to let them be decided by open tender.
The unsolicited proposal formula is designed to assess a single project on its merits, not examine the broader industry and possibilities not placed before it. That's the government's quite incredible failure: allowing the method of dispensation of licences to be determined by the one or two seeking the licence.
Echo's pitch to expand the Star does nothing to fix that.
There is another possibility: taking the responsibilities of government seriously in awarding more casino licences would include a thorough review of the overall gambling industry - and a government in the pocket of the clubs and pubs industry might not like what such a review would find. Wonder what odds Tom is offering on this play-the-ball, kiddies?
Frequently Asked Questions about this Article…
The article highlights a scramble between major operators — notably Echo Entertainment and James Packer’s Crown — to secure additional casino access in NSW. Both are trying to use the government’s "unsolicited proposals" route to gain favour, a process the author argues is unsuited to awarding exclusive casino licences and risks backdoor deals rather than open competition.
According to the article, Crown and Echo are exploiting a weakness in the unsolicited-proposal process. Crown is attempting to use that loophole as a way of getting a casino licence through the back door, while Echo is using a separate unsolicited pitch (including a proposed $1 billion spend around Pyrmont) to cement or extend its licence position.
The article says Echo’s $1 billion offer to expand the Star around Pyrmont could be a tactic to protect or extend its casino licence monopoly via a rear entrance. It suggests Echo might also be trying to pressure Crown toward an expensive takeover by increasing competitive and political pressure.
James Packer’s Crown is pursuing its own unsolicited proposal route to gain casino access in Sydney. The article notes Crown is also waiting for regulatory permission in Queensland and NSW to increase its current 10% stake, and that the company may try both backdoor unsolicited proposals and frontdoor takeover options.
The article argues that the unsolicited-proposal formula is meant to assess single projects on their merits, not to review the broader gambling industry or decide how many licences are appropriate. That makes it a poor method for awarding scarce, exclusive gambling licences and leaves the decision-making effectively to the applicants rather than to open government policy.
The piece recommends the government should determine the 'right' number of casino licences for NSW and then use an open tender process to award them. It also suggests a thorough review of the overall gambling industry — rather than letting unsolicited proposals drive licence dispensation — to protect taxpayers’ interests and public policy goals.
The article warns that if the government favours backdoor deals or lets big operators set the terms, taxpayers could miss out on the best use of a scarce resource and on competitive tender proceeds. For everyday investors, the concern is about regulatory unpredictability, potential concentration of gambling assets, and political favouritism that can affect industry dynamics.
The article references The Star’s recent unhappy history, the influence of the clubs and pubs sector, and the broader gambling environment (including poker machines and figures like Tom Waterhouse). These factors point to reputational, regulatory and industry pressures that can shape casino licence outcomes and market dynamics.
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