NSW Premier Barry O'Farrell has embraced plans by James Packer for a second Sydney casino at the Barangaroo site.
James Packer's casino group, Crown, advised O'Farrell that Crown envisaged the casino could be part of a new hotel and restaurant complex in the centre of the harbourside site.
O'Farrell says the proposal for a second venue would bring jobs and tourism to Barangaroo, but it would need to gain regulatory approval before going ahead.
At the moment the Barangaroo Delivery Authority says the site is intended for ''civic, educational and recreation spaces''.
O'Farrell says: ''I think it's an exciting proposal which could add extra life to Barangaroo, give Sydney another world-class hotel, generate jobs and boost tourism.''
''It's the sort of tourism-related investment we want in Sydney but everyone's aware there are a range of regulatory approvals needed before it could proceed,'' O'Farrell says.
Only one casino licence is allowed in NSW until 2019.
On Friday Crown increased to 10% its stake in Echo Entertainment, which owns the nearby Star casino, and has sought permission from regulators to increase its stake further.
If Crown can gain control of the Star, its executive chairman, James Packer, could pursue his plan for a Barangaroo casino to operate under an extended licence for the Star.
He has signalled that such a casino would not need poker machines and could simply have gaming tables, of which the Star can have an unlimited number.
It was 1994 when James Packer’s late father, Kerry Packer, lost the battle over who would run Sydney's first casino.
At the time the preferred tenderer, Leighton and Showboat, accused rival Kerry Packer consortium of running an orchestrated campaign to discredit Leightons over details within the report of the royal commission into the building industry involving Leighton and other builders over sharing tendering fees.
The Sydney Morning Herald’s coverage of the latest $1 billion casino entertainment plan came with an immediate condemnatory tone given it had been envisaged that the land was to be set aside as "playing fields for office workers."
The ABC report quotes architect Philip Thalis, who was on the original Barangaroo design winning team, and is horrified at the way decisions are being made.
"This just shows what a complete failure of planning we've had in Sydney," he said.
"We've had a continual erosion of what could have been, what should have been, Sydney's great new public western waterfront."
John Lee from the Tourism Transport Forum says it would add life to the area.
"You only have to go to Melbourne and see that area around the Yarra River, yes there's Crown Casino there, but there is also movie cinemas, bowling alleys – there's all sorts of things that entertain people when they go to the precinct," he said.
Echo Entertainment chairman John Story has told the Australian Financial Review he will not allow James Packer to win control of the company cheaply.
Story said Echo shareholders were concerned Packer was trying to seize control of the $2.96 billion casino group without having to pay a takeover premium, after the Crown Limited chairman more than doubled his stake in Echo to 10 per cent in a $256.6 million share raid on Friday.
Packer will need the approval of both the NSW and Queensland governments to increase his holding Echo beyond 10 per cent as ownership of the group is capped at that level.
Mr Packer, who owns 46 per cent of Crown, has indicated he does not wish to take full control of Echo, although he is expected to increase his holding.
“We are just concentrating on getting the government to lift the 10 per cent shareholder cap at the moment. That is out primary goal,” Packer said.