The Endeavour Group Ltd (ASX: EDV) share price has seen plenty of volatility over 2022. It's actually up slightly over the year, but the company is down close to 17% since mid-August.
This is the business that was separated out of Woolworths Group Ltd (ASX: WOW). Endeavour has poker machines, hotels, and liquor retailers in its portfolio.
Government regulation and changes to the gambling industry could have an impact on Endeavour shares.
So, it's important that investors know about what the New South Wales government is proposing.
Cashless gambling card on the cards?
The NSW government's Racing Minister Kevin Anderson had introduced legislation to parliament according to reporting by the ABC, and various other media outlets.
The Crime Commission's report into money laundering in pubs and clubs found that "dirty money was being funnelled through the gaming rooms of suburban pubs and clubs and recommended a cashless gaming card".
Crossbench MP Alex Greenwich "planned to introduce an amendment to the legislation so it would include a cashless gaming card to address problem gambling and money laundering", according to the ABC.
The original legislation didn't have a proposal for a cashless gaming card.
There has reportedly been opposition in the industry to cashless cards, as well as from some within the government.
Greenwich was quoted by the ABC:
NSW is the gambling harm capital of the world, and clubs have become mini casinos where money laundering is rife.
Urgent action is needed, and that includes a transition to cashless cards in all gaming venues in NSW.
The ABC reported that it understands the plan is for the response to the commission's report to be produced ahead of the March election, but won't be in time to make legislative changes.
One particular measure would allow gamblers to set a 'spending limit' and "create a paper trail for criminals if they deposit the proceeds of crime into a bank account".
NSW Crime Commissioner Michael Barnes suggested that the card should be mandatory.
The ABC reported that the Australian Hotels Association of NSW (AHA NSW) said the introduction of mandatory cashless gaming cards would be "unjustified overreach", because the NCC found the use of poker machines to wash money was not widespread.
A three-month trial of a cashless gaming system was launched in Newcastle in October.
What does this mean for Endeavour?
According to reporting by NABTrade, the broker Jefferies said that if cashless gambling cards are implemented by the NSW government then the implications would be "impossible to estimate".
Jefferies said cashless cards could increase Endeavour's revenue because they are associated with increased expenditure.
The broker estimates that NSW accounts for around a fifth of Endeavour's hotel earnings before interest and tax (EBIT).
It's rated as a buy, with a price target of $8.20. However, a cashless card with pre-commitment and low default loss limits could have "material implications" for revenue and earnings. A change to regulations could also mean other states change their laws as well.
Endeavour share price snapshot
Over the last month, Endeavour shares are down around 2.5%. They are also down around 2% over the past 12 months but are up by a similar amount this year to date.
