Billionaire James Packer looks likely to get his own Sydney casino licence – Sydney’s second – according to media speculation.
The Australian Financial Review (AFR) has reported that the NSW state government is expected to give the go ahead for Packer’s Crown Limited (ASX: CWN) to receive a casino licence for its new six-star hotel complex to be built at Barangaroo on Sydney’s foreshore.
The NSW opposition has confirmed that they will support the project, subject to some key conditions. These include no poker machines, a fair return to the state, no intrusion into the public space at Barangaroo and Echo Entertainment Group (ASX: EGP) continuing to hold its exclusive licence until 2019. With support from both sides of politics, it appears official approval is now just a formality.
Crown has already signed an exclusive agreement with Lend Lease Limited (ASX: LLC) to build the $1 billion hotel and entertainment complex, that will include a VIP or high-rollers gambling facilities.
Given Crown no longer needs Echo’s cooperation for its casino plans, the question is what will Crown do with its 10% holding in Echo? Will Crown still proceed with its plans to acquire up to 25% of Echo, and what will Echo do?
Given there are still six years before Crown gets its hands on the licence, it may still proceed with its plans to influence Echo’s future and gain a measure of control over Echo’s casino licence. After all, what’s better than one casino licence but two?
Echo faces six years of business as a monopoly with Sydney’s only casino licence, but it faces some issues in 2019, when its licence expires. Labor spokesman Luke Foley has told the AFR that parliament would not legislate to create a casino duopoly. Instead, casino licences could be open to competitive tender.
Two Sydney casinos could still exist, with Crown focusing on high rollers/VIP gamblers, and Echo’s The Star casino focusing on everyday punters. Echo’s shareholders appear concerned, with shares in the company dropping 6% this morning.
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