James Packer’s Macau casino joint venture has received a much to be desired earnings forecast from Credit Suisse gambling analyst in Hong Kong. Packer’s latest, the new City of Dreams casino, has posted disappointing results in the first four months of trading with analysts believing that ‘mass market’ gamblers are now spending 15 percent less in the Macau gambling industry. With this news in hand, Credit Suisse has cut the earning forecast of Packer’s casinos by 81 percent, falling to just US6 cents a share by December 2011.

Packer’s City of Dreams casino happens to enter a now very crowded strip of casinos in Macau, all competing for the gambling dollar. Although 41,000 people have walked through City of Dreams everyday since opening its doors in June, most of the visitors are there to enjoy the flashing lights and entertainment, rather than sitting down and playing at the many tables on offer.

The City of Dreams project is Packer’s now flagship project after purchasing a casino licence for $1.3 billion using both investor funds and his own money. Opening in the worst world recession since World War II, Packer is still losing out to the Macau Venetian which clearly opened with the mindset of being the grandest of the lot.

Currently, the equation that Packer faces is that 28 percent of its revenues are coming from the mass market players. For its earning forecast to grow, he needs the mass market players coming in to contribute up to 40 percent of its revenues, since it has higher profit margins than high roller gambling. With the use of smarter incentives, Packer will need to out manoeuvre his rivals to slice out a bigger chunk for himself.

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