Reef Casino Trust shares fall on ACCC gobbledygook

Competition regulator raises an unusual issue

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Shares in Cairns' sole casino owner Reef Casino Trust (ASX: RCT) have dropped 4.8% today, after the Australian Competition and Consumer Commission (ACCC) raised its concerns over a new casino to be built.

Aquis Reef Holdings, owned by Hong Kong billionaire Tony Fung, had planned to open an $8 billion casino resort 15kms north of Cairns, while separately making a $217 million bid for Reef Casino Trust.

Today the ACCC says it is concerned that Reef Casino was the only competitor to the new proposed resort, and was worried about customers missing out on promotions, cheaper prices and the improvement in services that two competing casinos would bring to the region.

To me that argument makes no sense at all.

If the ACCC knocks back Aquis' plans, there's only going to be one casino in Cairns – like there is now, and if Aquis assumed control over Reef Casino then there would likely only be one casino, with Reef's casino potentially closed down. Either way, there's likely only going to be one casino. Knocking it back may also have consequences for attracting other casino operators to the region.

It's an odd stance to take, given most cities around Australia only have one exclusive casino licence on offer. Will the ACCC now raise concerns over Echo Entertainment Group Ltd's (ASX: EGP) Brisbane and Gold Coast casinos, Crown Resorts Ltd's (ASX: CWN) Perth casino or SkyCity Entertainment Group Limited's (ASX: SKC) casinos in Adelaide and Darwin?

And it seems odd that the ACCC thinks the Aquis proposal, which includes 7,500 hotel rooms, 750 gambling tables and 1,500 machines is somehow not economically better for the region than Reef's existing 128 hotel rooms, 38 gambling tables and 500 machines.

While the ACC has yet to make its final decision – that's due by August 21 – Reef Casino says it would work with Aquis and the regulator to address the issues raised. The Queensland government may well have something to say about it as well – it is pushing for more casinos to stimulate the state economy and create jobs.

Motley Fool writer/analyst Mike King doesn't own shares in any companies mentioned. You can follow Mike on Twitter @TMFKinga

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »