AUSTRALIA
government at ransom – if it doesn’t pass the legislator will quit the coalition sending the country into a spin and early elections. While heralded as the government’s solution
to problem gambling, the industry argues it will not help and it will definitely hurt and doesn’t address problem gambling. “Pre commitment is more of a political issue
and less an industry issue, the CEO of the Australia Gaming Technologies Association (GTA), Ross Ferrar, argues. “We support volunteer pre-commitment” says “but mandatory pre-commitment would simply wipe out the industry.” GTA comprises the industry’s main gaming machine suppliers. Ross Ferrar reckons it would take millions of dollars and “around 25 years” for the technology to be implemented throughout the country’s massive machine numbers and playing venues, which feature many machines running somehwat less than state-of-the-art technology. Ferrar argues that if enacted, the legislation will inhibit the majority of casual players and many a regular
Interview with Larry Mullin, Echo Entertainment CEO
Larry Mullin has reasons to be a happy man. He steered Echo Entertainment through the demerger from Tabcorp, launched the rebranded The Star establishing a foothold in the VIP market, and is getting ready to break ground into revamps in Queensland. If he delivers, the company will have the right to go anywhere it’s wanted…
A few months after the demerger from
umbrella gaming operator Tabcorp and just 30 days into the Star property’s re-launch, Larry Mullin was already seeing results. The Star posted a 10.5 percent yearly gaming revenue increase in October with VIP also tracking strongly. “It’s early days but the indications are the project is going to be well received,” Larry Mullin tells Macau Business. While the Australian VIP market is growing
at 12.5 percent for the past five years Echo is growing three times as fast, up 34 per cent over the previous year. Mullin explains the numbers by saying the company is “coming off a low base.” The fact is the operator has just recently got back into the VIP business after a long string of attempts to break into the lucrative market, some of which ended up giving the old Star City a shady reputation. Mullin hopes the newly revamped property will change all that. Having already carved roughly a 30 percent
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player to place a bet on a machine if required to register with a national database for problem gambling. Mandatory pre commitment “treats everyone as a problem gambler,” Ross adds. Many of the venues, such as community clubs and pubs, which are dependent of the slots revenue to operate “would be forced to close and send thousands into unemployment. The large casino operators Echo and Crown are also against mandatory pre commitment, which in their view would have “devastating” consequences to the industry in both gaming and the supporting non-gaming operations. Mandatory pre commitment sounds far fetched, even in a strongly regulated market in Australia, but Macau Business learned from a high level gaming executive at a local operator that at one time the Gaming Inspection Bureau brought it to the table and discussed with the local operators. The sheer implications of the scheme, including if it should either be directed to locals only, visitors or both, sent it back to the drawing board.
share of the Australian VIP market from just over 15 percent, Larry is confident Echo Entertainment will be able to reach an equal split from rival Crown which has long since been catering to VIP market and controls the lion’s share of the market. Larry admits that VIP-wise, “the benchmark has always been Melbourne” from where James Packer operates the operators’ flagship property, but that might just change.
Domestic, and VIP The biggest hindrance to the growth of the
Australian VIP market is arguably the success of the Macau and Singapore markets attracting a short supply of big punters. “We compete with everybody for free time and money,” Larry says, putting things into perspective: “Australia is a niche market to Macau in many ways that Las Vegas is today.” But Vegas is a 14 hour flight from Asia versus a nine hour flight to Sydney and the Gold Coast, or shorter still in one of Echo’s two private jets. And out of the Asian and Mainland Chinese players that travel to Macau and Singapore, Echo Entertainment is banking “on the subset who also like to see other things but they want to be treated and gamble in the same manner as to what they are accustomed to – and that’s what we want to be able to offer.” Why people go to one place versus another “is the reputation that it demands based on how they deliver their service to the costumer,” Larry adds. The rationale makes up for part of the reason of the expansions in Sydney and soon in the Gold Coast: “When you’re building out at this rate why would you not build to accommodate
The Australian gaming market would be
favourable to voluntary pre-commitment but within reason especially in terms of the implementation time line which would have a drastic impact on machines and system refurbishment costs. “The general outlook for the industry is that
we are united and we are looking forward to a stable, confident future after the pre- commitment legislation is defeated,” Ross Ferrar tells Macau Business. Draft legislation will be published in March, which Ross Ferrar believes will be defeated in Parliament. Until then, all of the industry focus will be on pre-commitment issues. With so much capital being injected into
property revamps to make way for larger, better VIP services for international players as well as improving the domestic offering, researchers give Australia a positive outlook. Growth won’t command the same rates as Macau or Singapore – but then, Australia is an established and mature market, and a stable and profitable one at that.
the biggest customer in the market?” But will that be enough, Macau Business
asks? “If we were spending billions of dollars on just that customer and dependent on that then I would say you have an argument,” Larry retorts. However that’s not the only basket Echo is placing its eggs. “We compete on certain costumers for the same business but we also compete with everyone in Sydney with free time to do other things and if we have something here that its unique and interesting then we’ll probably going to be pretty successful in attracting a very large market here.” Echo’s Star caters particularly to a very
large Asian population within walking and driving distance to the property and its CEO believes that the non-gaming and gaming on offer “is something unique that we can make a nice return on our investment.” Mullin says his rising Star doesn’t feature an Asian theme, but concedes that patrons “will find hints, interesting places to frequent that are very representative” of whom the customers in the market are. “The great thing about our business is that
it’s predominantly a locals business and yet if you treated it as such you’ll never get the overseas customer to want to come.” Larry underlines that breaking down the numbers and looking at what percentages of business comes from which segment against what the company is investing and how much it needs to attract to make it reasonably profitable. “It’s not too much of a stretch. We’re in the tourism business and we needed to fit these properties out to attract the right kind of tourists.”
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