Echo Entertainment Group Ltd. (EGP), which has a 97 percent share of Queensland’s casino market, fell 5.2 percent to a two-month low in Sydney trading after the Australian state said it may issue as many as three new licenses for gambling resorts.
The stock was at A$2.58 at 12:01 p.m. in Sydney and headed for its largest drop since July 5. while its major competitor, Crown Ltd. (CWN), owned by billionaire James Packer, was 2.2 percent higher at A$16.195 after touching a record of A$16.46. Macquarie Research upgraded its recommendation on Crown to outperform.
Queensland will allow rival bids for a site in the state capital Brisbane where Echo currently has one of its three casinos in the state, Premier Campbell Newman said in an e-mailed statement yesterday. The government is considering two more licenses in the state, he said.
The state government’s announcement adds “a further layer of risk and uncertainty in terms of potential new entrants,” UBS AG analyst Sam Theodore wrote in a note to clients. “The uncertainty could impact the stock for some time.”
Echo gains the bulk of its Queensland sales from its landmark Jupiters casino on the Gold Coast. Its position is under threat as the regional government there considers proposals for a new casino from Skycity Entertainment Group Ltd., Brookfield Asset Management, Zhuhai Ridong Group Ltd., and China State Construction Engineering Corp.
Echo has slumped 25 percent this year, compared with a 52 percent rally for Crown and a 13 percent rise in the benchmark S&P/ASX 200 Index.
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