* Crown heads list of Australia's failed global expansions -Packer
* Problem gambling is a threat to business - Packer
* Crown says VIP turnover at casinos down 17 pct (Recasts throughout)
Oct 26 (Reuters) - Australia's Crown Resorts Ltd failed with its global strategy, its billionaire half-owner conceded on Thursday in his first public comments on why the company had suddenly retreated from offshore over the past year.
Volumes have slumped at the country's biggest casino company in the fall-out of a decision to quit selling gambling holidays in China after 16 of its staff were jailed there.
James Packer also dismissed as "a lie" recent allegations of the company tampering with poker machines at its flagship casino in Melbourne.
Packer, 50, has seen his business credentials come under fire in the past year after Crown staff were imprisoned in China for marketing so-called casino tours in violation of the country's strict anti-gambling laws.
The Sydney-listed A$7.9 billion ($6.1 billion) company promptly quit a decade-old global expansion plan involving the Asian gambling hub Macau, the only Chinese territory where gambling is allowed, and Las Vegas, to focus on Australia.
"In terms of the list of Australian companies that have gone offshore and come back to Australia with their tails between their legs, I think we're at the top of the list," Packer said at Crown's first annual general meeting since he returned to its board in August 2017, following a short stint away.
"We didn't succeed in the global strategy," Packer added.
At the meeting, Crown said VIP turnover at domestic casinos was down 17 percent since the start of the financial year on July 1, partly due to declining numbers of rich Chinese punters.
But Packer said VIP volumes were growing, although he did not give details.
Crown was rattled a week earlier when a lawmaker tabled in parliament a video of what he said were three of the company's former staff saying it rigged slot machines to remove controls to prevent problem gambling, and encouraged patrons to disguise their identity to sidestep anti-money-laundering controls.
The company has denied the allegations, and has taken out full-page newspaper advertisements to reject the claims.
Confronted at the meeting by a shareholder who said she had been addicted to gambling, Packer said he felt sorry for her but called the allegations by an anti-gambling politician "a lie".
"But from a business perspective, the worst thing that can happen is people like you blow themselves up in our casinos, because then there is a political backlash," he told the shareholder.
"We're not the bad guys in this game," he said, trying to differentiate Crown's casinos from pubs and clubs which have most of the country's slot machines.
The allegations prompted gambling authorities in the state of Victoria, where its flagship casino is located, to say they would launch an investigation.
Crown shares were up 1 percent in afternoon trading, while the broader market was flat. ($1 = 1.2965 Australian dollars) (Reporting by Sonali Paul in Melbourne; Writing by Byron Kaye in Sydney; Editing by Himani Sarkar)