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SKYCITY (ASX:SKC) share price drops lower on Adelaide COVID lockdown news

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The SKYCITY Entertainment Group Limited (ASX: SKC) share price was out of form on Wednesday and dropped lower.

The casino and resorts operator’s shares ended the day 0.35% lower at $2.88.

This compares to a 0.5% gain by the the S&P/ASX 200 Index (ASX: XJO).

Why did SKYCITY share price drop lower?

The SKYCITY share price came under pressure on Wednesday after it announced that it would be forced to close its Adelaide-based casino and entertainment facilities from midnight tonight.

This follows an announcement by the South Australian government earlier today that revealed a range of new state-wide COVID-19 restrictions that are being implemented to prevent the spread of the virus following a recent outbreak.

As things stand, SKYCITY is expected to close its Adelaide operation for six days until midnight on 24 November.

In light of this, the company advised that the opening of its new $330 million expansion development, which includes a 120-room luxury hotel, will now be delayed until further notice.

Positively, the company’s New Zealand operations are unaffected and remain open at Alert Level 1.

What else is happening?

SKYCITY isn’t the only casino and resorts operator that is being forced to delay the opening of new facilities.

This afternoon the New South Wales Independent Liquor and Gaming Authority (ILGA) revealed that it will prevent Crown Resorts Ltd (ASX: CWN) from opening its new Crown Sydney operation in December as previously planned.

This is in response to Crown admitting at an inquiry that it was likely that money laundering had occurred through accounts it set up for its VIP players.

NSW ILGA’s chairman, Philip Crawford, commented: “Because when we talk about money laundering … we’re talking about potential drugs, child sexual exploitation, people trafficking and financing terrorism … you can see why we have concern.”

“In light of this, we did not consider it appropriate to determine the applications before the Authority until the findings of the Bergin Inquiry,” he concluded.

The findings of this inquiry are not expected to be released until February.  

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Returns as of 6th October 2020

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Crown Resorts Limited and Sky City Entertainment Group Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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