James Packer's Crown Limited (ASX: CWN) has received a boost after the NSW premier, Barry O'Farrell said that the company would not need a casino licence for its planned six-star hotel and casino complex at Barangaroo, on Sydney's waterfront.
According to the Australian Financial Review, the state government is reportedly proposing to grant Crown a gaming licence that would allow the new project to go ahead, despite Echo Entertainment Group (ASX: EGP) holding Sydney's exclusive casino licence until 2019.
Crown's planned casino at Barangaroo would only cater to high-rollers, or VIPs and would be by invitation only, according to Mr Packer. The company has signed an agreement with construction company Lend Lease Limited (ASX: LLC) to build the luxury complex.
Crown currently owns 10% of Echo, and has applied for regulatory approval to increase its stake up to 25%. Media reports suggest Crown wants to gain control over Echo, so it can extend Echo's casino licence to Barangaroo, should it fail to gain its own licence to operate its high-roller gaming room.
Echo is also facing pressure on its Gold Coast and Brisbane casinos, with news earlier this week that the Queensland government is considering plans for a new casino to be built as part of a new cruise ship terminal on the Gold Coast. It's understood that three of the four shortlisted parties vying for the project have included a casino in their bids.
Media reports have also suggested that Mr Packer has toured Sri Lanka and met officials, with an eye to expand his global casino empire into the island nation. Crown currently has casino operations in Australia, the US, UK, and in Macau through a 33.7% holding in Melco Crown Entertainment. Melco also has plans to expand into the Philippines.
Foolish takeaway
The latest statements from the NSW premier suggest Crown may not need its investment in Echo to pursue its plans for Sydney's Barangaroo. Should the state follow through on its comments, we could see Crown sell out of Echo.
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The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. Motley Fool writer/analyst Mike King doesn't own shares in any companies mentioned.
