Because the non-market(and players in it) like the government, NGOs, international relationships, laws and regulations always affect the market strategy for every firms, we actively and preemptively consider the non market factors. The presentation is about Crown Casino's non-market strategy (Presented in Professor Daniel Justin Blake's Business, Government and Society course in IE Business School MBA)

1. Crown Sydney
How a company successfully
managed its non-market
environment in order to
achieve its corporate
strategy aims.
a BGS case on

2. Introduction
• Crown Resorts Ltd is one of Australia’s largest entertainment groups and owner-
operators of Crown Casinos.
• In 2012, Crown launched its bid to build a 2nd casino in Barangaroo, government-
owned land in the heart of Sydney, New South Wales.
• Crown had to overcome large regulatory, political and public sentiment issues in
order to be successful.
James Packer,
Chairman of Crown Resorts

3. 1. Casino Industry in Australia

4. 1. Casino Industry in Australia
• 4th largest market in the world
• 2012 market revenue was $4.2bn
• Big 3 players
Crown: 52% of market share, 2 casinos
Echo: 32% of market share, 3 casinos
Skycity: 5% of market share, 2 casinos
Market Overview
38Macau
Las Vegas
Singapore
Australia
Atlantic City
0 842 6
Source: Morgan Stanley
Gambling Revenue 2010 ($ bn)

5. 1. Casino Industry in Australia
• 80% of Australians participated
in some form of gambling
• The highest spending in the world
• Of which about 60% was spent on
the ‘Pokies’ (poker machines)
• Estimated social cost of
between $3.5-6.3bn
Public Health issue
Australia
Singapore
Ireland
Canada
Finland
0 14001000200 1200
Source: H2 Gambling Capital
Gambling loss per resident adult 2010 ($)
800400 600

6. One in six Pokies players have a serious addiction in Australia

7. 1. Casino Industry in Australia
• NSW Casino Control Act(1992)
- Only 1 casino license
allowed
• Current license held by Echo
Entertainment until 2019
Regulation of casino is
a state issue in AU

8. 2. Crown Resorts Ltd.
Crown Melbourne

9. 2. Crown Resorts Ltd.
• Australia’s largest entertainment and integrated resort groups
• Headed by James Packer, the fourth richest person in Australia by
Forbes
• Crown’s resorts attract over 25ml visitors every year
• Key differentiation factor in market strategy:
Build and operate integrated resorts, attracting Asian tourists
• Already running two integrated resorts in Melbourne
and Perth
Company Overview

10. James Packer and Tony Abbott, Australian Prime Minister
greet Abe Shinzo, Japanese Prime Minister

11. 2. Crown Resorts Ltd.
To achieve their vision of being Australian leading tourism and entertainment business
with a global reach, they need to have another casino in Sydney.

12. 2. Crown Resorts Ltd.
• Initially, Crown attempted to obtain a Casino sub-license from Echo
Entertainment but was unsuccessful.
• Public opinion regarding the negative impacts of a casino was strong,
especially in NSW which already had a large casino.
• Crown realized that a purely market response will not work in their quest to
build a second casino in Sydney.
Key Issues & Challenge
Crown decided to challenge to get a 2nd license directly
with non-market strategy.

13. 3. Crown’s Non-market Strategy
James Packer, Chairman of Crown Resorts

14. 3. Crown’s Non-market Strategy
Crown’s Proposal
 Building an integrated resort in Barangaroo
 Included a 6-star hotel and apartment complex, as well as a gaming
venue
 Casino is for VIP only (membership policy)
 No pokies (poker machines)
 Guaranteed tax revenue from Crown: AUD1 bn (by 2036)
Crown Sydney Hotel Resort
Unsolicited Proposal to NSW Government

15. Barangaroo, Sydney, New South Wales
Crown Sydney (at completion)
Opera House
Barangaroo is located on the north-western edge of the Sydney central business district and the
southern end of the Sydney Harbor Bridge.
Harbor Bridge

16. 3. Crown’s Non-market Strategy
Public Relations through charity programs
Charity programs are strategically
picked and covered by the
media to improve their reputation
and to reduce the negative
perception of the general public.

17. 3. Crown’s Non-market Strategy
Powerful connections in political, media and finance arenas
Head of
Tourism
Victoria
John
Howard,
Ex Prime
Minister
Ex Senior
Minister
the
Minister
of
Comm.
Premier
of
Western
Australia
Ex Liberal
Gov.
Treasurer
leader
Shadow
Minister
for
Finance,
Deregula
tion
Ex
Australia
Chief
Medical
Officer
Ex
Minister
for
comm. IT
& Arts
EX
National
Secretary
of the
ALP
ALP
Senator
Current
Chairma
n of
Tourism
Australia
Chairma
n of
Seven
West
Media
Ex Editor
in Chief,
Sydney
Morning
Herald
Inside Crown Outside connection

18. 3. Crown’s Non-market Strategy
Successfully shape the arena in which the decision would be made;
Go through Unsolicited proposal rather than a competitive tender process
 Unsolicited proposal is designed to develop private-public partnerships to provide new
infrastructure and services
 Put Crown in a better position to be able to exert influence on the process
 Reduce competition and opposition to the plan
“Decide where to fight
before start fighting”

19. 3. Crown’s Non-market Strategy
Framing: Economic benefit to Sydney through achieving tourism goals
 Increase in NSW Gross State Product: AUD638 ml
 New job creation: between 2300-3000 jobs
 Increase in exports: AUD512 ml
 Increase in investment: AUD151 ml
Sydney Tourism
+ =
Six Star Hotel
VIP Casino
Money
Job
Tax

20. 4. Outcome

21. 4. Outcome
Echo’s reaction
 Echo responded by submitting a counter-proposal to the NSW government
through the unsolicited proposals process as well.
In the proposal, Echo asked for
1) An extension of exclusivity to operate sole casino in NSW (up to 25 years),
paying a license fee of $250 ml
2) Revision to The Star’s regulatory and operating arrangement
(e.g. removal of limit of # of Pokies or the bet limit) – Failed to consider public opinion
In return, Echo proposed a series of commitments:
1) Total incremental investment of $1.1 bn – Less than Crown’s offer of $1.5 bn.
2) Ongoing maintenance of the integrated resort
3) Ongoing delivery of responsible gambling program
No framing! Not enough investment! Less connection!

22. 4. Outcome
 In November 2013, the NSW Casino
Control Act was amended to allow
a “restricted gaming license” to
operate specially in Barangaroo.
 The government gave the green
light to Crown in the same month.
 Crown’s license to operate will start
in 2019, once Echo’s exclusivity
clause runs out.

23. 4. Outcome
Lesson learned
Important of consistent engagement, not ad-hoc – must be deliberate
Build connections
Build PR
Framing
Information
Change arena
Use connections
-Before issue
cycle-
-On the issue cycle-
-Against the
challenge-