Packer Scraps His Plans for Tallest Casino in Las Vegas

The Australian billionaire James Packer has scrapped a $5bn (£2.5bn) plan to build the tallest casino in Las Vegas, blaming its demise on financial turbulence arising from the global credit crunch.

Packer, who is the second-richest man in Australia, has been expanding aggressively in the US to build on his Crown group's existing casinos interests in Melbourne, Perth and Macau. Crown's project in Las Vegas, unveiled last year, consisted of a 5,000-room hotel on an 11-hectare (27.5-acre) former water park along the glitzy Strip, incorporating a 324-meter (1,064ft) tower, which would have been the highest building in the desert city.

Rowen Craigie, Crown's chief executive, said: "The recent upheavals in world credit markets has made it increasingly difficult for Crown and its partners to develop a commercially viable project on what remains an attractive location on the Las Vegas Strip.

"Accordingly, we took the decision to stop making further payments to the vendors of the site and concentrate our focus on other areas of our business."

The development was a joint venture with a Texan property magnate, Christopher Milam, and with a private equity firm, York Capital Management.

It is a financial blow to Packer, who is the son of the late media entrepreneur Kerry Packer. His company will take a one-off charge of A$44m (£21m).

Initially, Crown wanted to construct a 575-meter tower, which would have been one of the highest buildings in the world, beating Chicago's Sears Tower. But the Federal Aviation Administration objected on the grounds that it would be an obstacle for planes landing at McCarran airport.

The American economic downturn has made it harder for developers to obtain funding from banks, which have suffered huge write-offs on bad debts. Earnings in the gaming industry are considered potentially vulnerable to a recession.

Angus Gluskie, a portfolio manager at Australia's White Funds Management, which owns a small stake in Crown, said: "It is indicative of the fact that in part credit markets are difficult at the moment. It is also indicative of the fact that in a slowing growth environment, the gaming sector does carry some short-term risk, given its exposure to discretionary spending."

Packer's father, who died in 2005, was a legendary gambler who blew more than $50m in Las Vegas when he became stranded there after US airspace was shut down following the 2001 terrorist attacks on the World Trade Center.