Place your bets: A second Sydney casino is coming

NSW government looks set to approve plans for casino

Mike King

Mike King is a Fool.com.au Investment Analyst and Writer. He caught the investing bug more than a decade ago, at a time when the U.S. had invaded Iraq and fear reigned in the markets. His initial success as the markets took off encouraged his passion and thirst for knowledge. With 13 years behind him at one of Australia's largest domestic banks, Mike's passion for stocks led him to join a boutique funds management firm, where he stayed for four years. A seven-year stint in equity research at one of the largest investment banks in the world followed that, giving Mike a thirst to pursue his passion further. Mike holds a Diploma in Applied Finance and Investment and a Graduate Certificate in Financial Planning. His passion is to help retail investors invest better, and that passion was one of his primary reasons for joining The Motley Fool Australia in late 2011. Mike has written thousands of articles since joining, including for Fairfax Media, Yahoo!7, Ninemsn and has also appeared on ABC's The Business. You can see all of Mikes' holdings here

Published October 24, 2012 10:55 am AEDT

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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Motley Fool writer/analyst Mike King doesn't own shares in any companies mentioned. The Motley Fool's purpose is to help the world invest, better. Take Stock is 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. Click here now to request your free subscription, whilst it's still available. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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