The Australian casino industry is unique. The decision was made back in the 1980s that it would be restricted to one casino per major city. Not surprisingly, all this did was create monopolies.
The NSW government has recently broken with this tradition and granted a second license in Sydney to James Packer’s Crown Group. This is the same group involved in Melco-Crown whose showcase casino in Macau is City of Dreams.
The proposed Barangaroo property – just across the harbor from The Star – is supposedly going to be a VIP-only casino aimed at the lucrative Asian high roller market which has set up base in Macau, Singapore and southeast Asia. It’s a windfall for the NSW government coffers and the Packer Group, but raises many interesting questions.
Firstly, why was there a monopoly in the casino industry in the first place? At the very least it should have been noted long ago that the market has matured enough for there to be some healthy competition. The reason the monopolies hold strong is only to appease the far left who feel that limiting casinos will reduce the number of people who gamble.
This is a simplistic approach and the real losers are the general public. Monopolies make companies rich at the expense of the consumer who fails to reap the advantages competition brings. Competition raises standards and lowers prices and this is why governments usually fight against monopolies, not endorse them.
However, there remains a contradiction in NSW with Premier Barry O’Farrell claiming on one hand that Barangaroo will end the state’s monopoly while on the other hand insisting this new casino isn’t competing with The Star because there will be no slots, no small limit tables and entry restricted to members.
There also appears to be a problem with how this new license was issued. Greens MP John Kaye pulled no punches when commenting on the granting of the new license, calling the process “a sham and the outcome a disgrace … the decision was made without tender, without public input and without any concern for the windfall opportunities it will bestow on organized crime and money launderers.”
I wouldn’t go as far as Mr Kaye and make no mistake he is a politician who tries to take away peoples’ freedoms. He would do away with all casinos given half a chance.
Personally, I would do away with all monopolies instead and issue further licenses. This would see a fairer system, spread the wealth and most importantly give the consumer options when spending their money. The problem is that politicians and big business only serve their own interests which usually has nothing to do with providing what is best for the average consumer.
