James Packer’s Crown Resorts Ltd (ASX: CWN) has officially announced that it’s entering the race to develop a casino in Brisbane. Under the proposal to develop the Queen’s Wharf Precinct in Brisbane, the Queensland Government will issue a new and highly prised casino license to the successful applicant.
Has Packer played a winning hand?
For its bid, Crown has announced that it has teamed up with Chinese state-owned enterprise Greenland Group to jointly prepare a development proposal for a luxury resort which will include a casino, a six-star hotel, and commercial, residential and retail components.
Crown’s announcement comes less than a month after rival Echo Entertainment Group Ltd (ASX: EGP) submitted its proposal which was done in a joint venture with two Hong Kong-based corporations, with strong links to Chinese and other Asian markets.
Echo has a lot to lose!
Echo’s shareholders have been shocked by the loss of their monopoly casino position in Sydney after Packer swept in last year and was granted a limited-casino license as part of winning the rights to develop the Barangaroo site. If Packer succeeds in his bid for a casino license in Brisbane it will become the second time Echo has lost a monopoly position and the second time it has been trumped by Crown.
A better bet?
While Crown and Echo battle it out to spend billions of dollars in the prime Sydney and Brisbane markets, SKYCITY Entertainment Group Limited-Ord (ASX: SKC) continues to enjoy the benefits of its monopoly casino licenses in smaller markets such as Adelaide, Darwin and Auckland. With a yield of 5.7% and a price-to-earnings ratio of 15.2, SkyCity has a lot going for it.
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Returns as of 6th October 2020
Motley Fool contributor Tim McArthur does not own shares in any of the companies mentioned in this article.
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