FEARS that James Packer's Crown misjudged its investment into the US gambling market have triggered an analyst to write off a $414 million investment as worthless.

A gambling industry analyst with Citi, Jenny Owen, said the small stakes in two debt-laden US casino companies were now worth nothing "due to the highly leveraged nature of the private-equity-owned casino operators and the downturn in industry revenue".

Crown spent $172 million on a 2.5 per cent stake in Harrah's Entertainment in January and $242 million on a 4.9 per cent stake in Station Casinos Group in August last year. The purchases were made at the top of the market and before the casinos were hit by the worst of the fallout of the credit crisis.

In August Crown was forced to write them down by $258 million, blaming their exposure to the ailing Nevada gambling market and their high debt levels. Since then both have had further falls in visitor numbers and rising debt costs.

In recent weeks they have been busily trying to renegotiate their heavy debt loads, asking their bondholders to swap their notes for new ones that have a lower value but will be easier to redeem if they collapse.