James Packer is the voice and Echo is, well, the echo
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 NSW 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 back door, 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 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 and, presumably, swallow Pyrmont, 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…
Echo Entertainment has put forward a roughly $1 billion alternative to James Packer's Barangaroo proposal, while Crown (linked to Packer) is pressing its own bid and seeking to raise its stake. Both companies are using the NSW government's "unsolicited proposals" route to press their cases, creating competitive tension and a political debate about how a new Sydney casino licence should be awarded.
An unsolicited proposal is a submission by a private developer proposing a specific project to government. The article argues this process is ill-suited to granting exclusive gambling licences because it assesses single projects on their merits rather than comparing broader industry options, potentially favouring the party that approaches government first or has political influence.
For investors, the unsolicited proposals route creates regulatory and political uncertainty. The article suggests it can prompt aggressive strategic moves (including takeover pressure) and leaves outcomes dependent on government favour rather than open competition, so investors should watch approvals, political signals and any takeover activity closely.
The article recommends the NSW government determine the "right" number of casino licences for the state, conduct a thorough review of the gambling industry in the public interest, and award licences by open tender rather than through the unsolicited proposal loophole—thereby protecting taxpayers and ensuring fair competition.
Yes. The article says Echo appears to be using a $1 billion pitch to expand The Star and solidify its casino licence position around Pyrmont—characterising the move as an attempt to cement a monopoly via a "rear entrance" rather than through open competition.
The article argues that adding another casino licence would probably have limited impact because NSW is already "awash" with poker machines and betting options. In that context, another licence (or several) may not materially change the broader gambling landscape for taxpayers or consumers.
The article criticises political favouritism (including references to treatment of James Packer), past problems at The Star, and the government's apparent reluctance to undertake a proper industry review. It also warns about the influence of clubs and pubs interests and suggests the process has become more about political advantage than taxpayers' best interests.
Investors should monitor NSW government decisions on unsolicited proposals, any moves toward open tender or industry review, regulatory approvals (including Crown's requests to raise its stake), takeover approaches or counteroffers, and political commentary that could influence licensing outcomes—because these factors affect company strategy and regulatory risk for Echo, Crown and other gaming-sector players.
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