Crown’s plans to extend its business into other Australian jurisdictions should come as no surprise. After all, it has always had a long term vision to expand its gambling business from its Melbourne base into becoming Australia’s leading casino operator and a major casino industry participant globally.

After all, from the initial launch of its casino business in Melbourne in 1999, Crown has made forays into the United Kingdom, the United States, Western Australia and Asia. Some of these investments have been more successful than others, but all have been part of its objective to become the leading Australian gambling player.

These ventures have taken place in a number of ways, including through tenders, to strategic arrangements with key industry players, to tactical joint venture arrangements.

It is therefore appropriate that Crown’s more recent efforts have come through tactical dealings in shares in other listed gaming companies and through negotiations with governments concerning the grant of new gambling licences.

Some commentators have expressed surprise at the manner in which gambling industry participants have negotiated with governments in connection with gambling licences, on the basis that many of the relevant licences confer exclusive rights or appear to be granted on the expectation that no additional licensing opportunities are available. In Australia, it is quite clear from the recent announcements of Crown to move into the Sydney and Queensland casino markets that presumptions as to the conferral (and extension) of exclusivity (whether expressly or in practical effect) should not be made.

In this regard, it is necessary to recognise that any gambling licence is subject to the terms and conditions of its grant. Often, a review of an exclusive gambling licence focuses on its term rather than on the geographical scope of the licence (for example, Crown’s licence in Victoria is limited to an area within a 150 kilometre radius of Melbourne) or the nature of the business activities falling within the licence.

Governments are always prepared to consider changing the scope of the licensed activities that fall within the scope of a licence, particularly if there is an economic return in doing so. For example, the retail wagering licence conferred on the TAB in NSW was limited initially to the provision of totalisator services. Over time, these activities were extended to incorporate fixed odds wagering and a form of virtual racing, known as Trackside.

In the course of the publicity given to Crown’s expansion into New South Wales, it has been suggested that the exclusive casino licence conferred on Echo Entertainment did not cover certain types of VIP gaming activity. This is not correct. However, the boundaries concerning the scope of the activities covered by licences are not always precise, and can change over time with developments in technology. For example, through developments in the nature of electronic gaming machines, a number of venues throughout New South Wales provide gaming services through gaming machines which appear to operate as virtual table games.

There is often nothing in the licence which obliges the government (or other relevant authorities) to give a right of first refusal or a right of last match to an existing or a pre-existing licensee in respect of the activities covered by the licence following its expiration. It is this opportunity which has now become readily apparent through the approaches made by Crown to the relevant authorities in each of New South Wales and Queensland with a view to obtaining rights to operate casinos, in the case of New South Wales, following expiration of the relevant exclusivity conferred on Echo Entertainment and, in the case of Brisbane, due to the exclusivity having ended.

Often these discussions are initiated by the government or the relevant authorities; in other cases, it has been as a result of an unsolicited approach by an interested party.

None of these issues should cause comment. Perhaps there has been a degree of naivety by analysts and commentators in the gaming sector concerning the nature of a gaming licence that confers exclusivity on the licensee. It is clear that any perception of infallibility in the existing licensee (and a sense of favouritism in respect of any extension) that previously existed should not now be taken for granted and should always be questioned closely.

Indeed, exclusivities in the gambling sector should be viewed in the same way as exclusivities in respect of any commercial arrangement. They are a form of right that should be analysed closely to determine whether opportunities exist for competitors, both during and after the term of the relevant exclusive licence. Indeed, even where there is a perception that exclusive rights which have been conferred are inviolate, they should always be viewed by reference to the political (and economic) environment to determine whether there is any government objective or imperative which causes additional licensing opportunities to become available.

In the Australian environment, there is no doubt that Crown’s efforts at expanding its casino operations into Queensland will continue. Indeed, it is not just Crown which is looking at these opportunities: we note the recent references in the Australian press to Tony Fung’s plans for a Macau style casino in Cairns. It will be interesting to see whether other leading gambling industry participants focus closely on other licences in the gambling sector in Australia and elsewhere which involve an element of exclusivity to ascertain the extent to which they are fixed in stone for a specified period or whether they are capable of giving rise to other commercial opportunities, even during the current exclusive term.