By Byron Kaye
SYDNEY (Reuters) - If the remote Australian outpost of Christmas Island had its way, it would have reopened a local casino that once raked in billions of dollars instead of renting hotel rooms at an ageing resort to refugee camp workers.
The tiny island in the Indian Ocean is often the first port of call on Australian territory for asylum seekers en route from South Asia and the Middle East. In 2001, it made international headlines when Australia in a controversial move refused to let a Norwegian freighter disembark 438 asylum seekers rescued from a 20-metre (66-foot) fishing boat.
The hundreds of other asylum seekers who made it to Christmas Island have indirectly provided jobs to guards, immigration officials and translators in the camps, helping to sustain the island's $50 million economy. Now as the government considers closing several offshore detention centers, the island suddenly finds itself grasping for some kind of future.
Casino supporters hope to attract Asian gamblers including Chinese high rollers and grab a share of the record $43 billion in VIP gambling turnover that the mainland betting houses of Crown Resorts and Echo Entertainment Group enjoyed in the six months to December.
"If we don't look at something like that, the overwhelming majority of the Christmas Islanders will have to rely totally on welfare," said Warren Entsch, a member of the conservative Federal government, adding that a casino would employ a fifth of the island's population.
In a report last September, the lawmaker recommended the government grant a casino license to the current owner of Christmas Island Resort, which previously housed what was considered one of the world's most profitable casinos. The government will respond to Entsch's report in June.
Christmas Island, slightly bigger than Manhattan, has lurched between quick-fix economic solutions since a phosphate mine started to wind down three decades ago. The island briefly lured crowds of Indonesian high rollers in the mid-1990s. Then came fleeting plans at the turn of the century to make it home to Australia's first space launchpad.
The urgency of finding a new primary industry intensified this month after the government forecast savings from closing several detention centers, including those on Christmas Island. It was the first clear sign the government plans to shut the Christmas Island camps as part of its "turn back the boats" policy.
The island's population of detention staff has been falling as the asylum seeker community shrinks due to relocation of some refugees to the mainland 1,000 miles (1,600 kilometers) away and tougher navy patrols that have deterred new arrivals.
Trish O'Donnell, a Christmas Island real estate agent and employment agent, said the economy has contracted by up to half in the past year as the population has dwindled to under 1,000 from 3,500.
"It would be a fantastic thing if the casino did get off the ground, but who's going to come to Christmas Island?" said O'Donnell, who recently shut her cafe there because of the exodus of detention workers.
From 1994 to 1998 the Christmas Island Resort ran a casino, which folded when the Asian financial crisis hit patronage.
In 2000 the resort was bought over by Soft Star Pty Ltd owned by businessman David Kwon on what the Sydney-registered company said was an understanding from the government that a casino license would be granted.
"There is no doubt about the desire of the people of Christmas Island to have a casino license issued. When the casino was operating, over 400 people were employed. We want that license now," Gordon Thomson, president of the Shire of Christmas Island, said in an email.
South Korean-born Kwon paid A$5.7 million ($4.46 million) for the 156-room property, the island's only sizable resort. At its peak, the 43-slot-machine, 23-table casino turned over A$5 billion annually, Australian media reported.
Kwon did not respond to requests for comment, nor did Soft Star directors Robert Borbidge, a former premier of Queensland state, and Brian Lacy, former administrator of Christmas Island.
Resort manager Michael Asims declined to comment, directing all inquiries to Kwon.
"It's failed once, so I'm intrigued as to why whoever's funding it thinks it won't fail again," said David Newsome, an associate professor in ecotourism at Murdoch University.
"Maybe they're looking to the increase in outward bound tourists from China and guessing that they may be the takers. I can't imagine a lot of Aussie people from the mainland would go there," he said.
The original casino complex was backed by the youngest child of former Indonesian president Suharto. It shut in the middle of the Asian financial crisis amid declines in clientele from Jakarta and accusations of money laundering.
Entsch said the re-activated casino would have no link to its former owners, noting Kwon bought it from receivers.
"We've missed the boat with the casino," said O'Donnell, who has lived on the island for 15 years. "Singaporeans came here because they didn't have a casino. They've got one now."
(Editing by Ryan Woo)