Quote:James Packer's Macau dream rocks on

HIS fortune may have shrunk by billions of dollars but James Packer has opened the doors to what is arguably his biggest gamble yet.

Amid fanfare and fireworks, the first chips went down at the $2.9 billion City of Dreams - Mr Packer's second joint-venture casino to be built in Macau, the former Portuguese colony bordering southern China.

The increasingly reclusive billionaire stepped back into the spotlight last night to cut the ribbon to the new casino, alongside his chief partner in Melco Crown Entertainment, Lawrence Ho.

Christening one of its centrepieces, the Hard Rock Hotel, Mr Packer and Mr Ho smashed guitars hours before last night's celebrity-studded opening bash.

The City of Dreams stares directly across Macau's glitzy Cotai Strip at the Venetian, the world's biggest casino.

The property - almost 40,000 square metres - features 2000 gaming machines and tables, three hotels, a huge shopping, restaurant and entertainment precinct, and a spectacular multi-media attraction dubbed The Bubble.

"It is a crucial project," Lawrence Ho said.

"What is good for us . . . is good for our competitors and is good for Macau."

Experts believe there is much riding on the performance of the City of Dreams.

While Mr Packer has remained tight-lipped about the forecasts for the City of Dreams, Mr Ho has been brutally honest about the high-stakes game the men are playing in the middle of a global recession.

A poor reception for it may spell "the endgame for us," Mr Ho said last month.

"The investment case (for Melco Crown) basically comes down to how City of Dreams goes, so if you want to call it a sink-or-swim moment, well I guess it is," an analyst told BusinessDaily.

"Across the road you have the Venetian. That does about $500 million a year (in pre-tax earnings). The market is generally expecting City of Dreams to do $300 million. If it does that it's a success."

Since taking his late father Kerry's fortune above $6 billion, Mr Packer's net wealth has plummeted to $3 billion in the past year as shares in his divided kingdom - Crown Ltd and Consolidated Media Holdings - halved.

He is now only ranked the sixth richest Australian.

As well as Mr Packer staking much of his fortune on the venture, City of Dreams will be seen as an all-important test case for the future of Macau's gaming industry.

A 40-minute boat ride from Hong Kong, Macau now takes more gambling dollars than Las Vegas and Atlantic City combined.

But an attempt last year to stem the flow of visitors from mainland China dealt a dud hand to casino operators and put the brakes on the growth of the industry.

Mr Packer and Mr Ho hold a licence to build a third casino in Macau, but they remain publicly uncommitted to plans as yet.