On Saturday Australia’s gambling and entertainment group Tabcorp announced an expansion of its investment program in its three Queensland casinos from the A$175 million investment announced in October 2010 to A$625 million. The investment will deliver three world class entertainment destinations and provide a boost for the tourism and entertainment sectors in the state. The investment follows an in-principle agreement with the Queensland Government on a package of concessions that will support the long-term growth of the properties and the viability of the investment.

The investment programme, which is subject to Tabcorp entering into a binding agreement with the Queensland Government as well as regulatory, council and other planning approvals, will turn the casinos into attractive destinations for Queenslanders, interstate visitors and international tourists. It will significantly expand the number of hotel rooms, restaurants and event space, and will add new nightlife venues and spa and pool facilities. The investment includes the construction of two new hotels – one in Brisbane and one on the Gold Coast.

Tabcorp Chairman John Story said that the investment shows confidence in the long term future of the Queensland tourism market. “We see Queensland as one of the premier destinations for interstate visitors and tourists. Our investment will create world class destinations with a wide range of entertainment and leisure choices for our customers. This will put Queensland in a stronger position to grow its tourism market and compete successfully with new destinations in Australia and across the Asia Pacific region.” He added, “The Queensland investment follows the redevelopment of Star City in Sydney. Together, these investments will make the casinos an attractive growth business following the proposed demerger from Tabcorp.” Tabcorp Chief Executive Officer Elmer Funke Kupper said that the investment builds on the good progress being made with the expansion of Star City casino in Sydney.

“The investment in Queensland is consistent with our strategy to create attractive international entertainment destinations. The Queensland project will commence in 2011 as the investment in Star City is nearing completion. We now have secured attractive growth options for the entire casinos business for the next five to seven years.”

In October 2010, Tabcorp announced an investment of A$175 million at Jupiters on the Gold Coast. Following agreement with the Queensland Government, this investment will be increased to A$350 million. It includes an expanded gaming floor and new private gaming room and VIP gaming facilities as well as the following elements: a new 200 room 5-star boutique hotel; eight new restaurants and bars; a new international night life venue; new spa facilities and ‘ultra’ pool; and a ‘Beach Club’ on the ocean’s edge.

The A$260 million investment to create a Metropolitan Casino Destination in Brisbane will add much needed hotel capacity to the city and will significantly upgrade and expand the entertainment and gaming facilities available at the Treasury property. It includes a new 400-room 5-star hotel, an upgrade of the existing hotel and casino properties and will provide a new private gaming room and VIP gaming facilities and a new walkway to the existing casino.

There will also be a A$15 million investment to upgrade facilities at Jupiters Townsville including premium gaming facilities. The investment program will significantly expand the facilities and scale of the properties, particularly in Brisbane and on the Gold Coast, with more than 75% of the investment being directed towards non-gaming facilities such as hotels, restaurants, events space and spa and pool facilities. It is expected that overall visitation to the properties will significantly increase from the current 9 million yearly visitors.

Tabcorp has reached in principle agreement with the Queensland government on a number gaming concessions that will support the overall investment and improve the competitiveness of Queensland in the international VIP gaming market. The main concessions are: 500 additional Electronic Gaming Machines (EGMs), and transfer of 47 EGM licences from the Townsville casino to Treasury or Jupiters on the Gold Coast; 50 additional table licences; and a reduced tax threshold for interstate and international VIP customers. The gaming concessions are subject to regulatory approvals. Currently, the Queensland casinos hold a total of 3,136 EGM licences and 265 table licences.

The Queensland Government has also agreed to review the classification of Multi Terminal Gaming Machines (MTGMs) within 18 months. MTGMs are currently classified as gaming machines instead of table games. Other states in Australia have changed the classification of MTGMs in recent years. Tabcorp has committed to implement a voluntary pre-commitment system for EGMs in its Queensland casinos as part of its program to upgrade its gaming management technology.

The capital expenditure of the expansion program will occur after the proposed demerger of Tabcorp and be phased over six years. The first three years will focus on the construction of a new hotel at 159 William Street in Brisbane and the expansion of non-gaming facilities on the Gold Coast. This will deliver the vast majority of the expansion in gaming and non gaming facilities by financial year 2015. It is expected that the construction of the second hotel on the Gold Coast will commence in 2015 and be completed in time for the Commonwealth Games, should Queensland be awarded the Games. (E-12.13.10)

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