The Star Entertainment share price is dropping today after the casino operator announced reimposing of capacity limits at its Sydney casino.
The post Star Entertainment (ASX:SGR) share price drops on new restrictions appeared first on The Motley Fool Australia. –
Star Entertainment Group Ltd (ASX: SGR) shares are dropping lower today after the casino announced it will reimpose capacity limits at its Sydney property from today. At the time of writing, the Star Entertainment share price has fallen 3.7% to $3.68.
What did Star Entertainment announce?
In a short statement to the ASX, the casino said that from today, it will revert to operating with the one person per 4 square-metres rule (previously one person per 2 square-metres). Star Entertainment said the 300 patron capacity per area will also be reinstated.
The casino operator reported there will now be 7 zones across the casino area, including 3 zones on the main gaming floor.
The company says it made the decision following the New South Wales Government’s announcement on 20 December in relation to COVID-19 related restrictions. Those restrictions applied to the whole Greater Sydney area in light of the growing COVID-19 cluster centred on the northern beaches.
The Star Casino in Sydney is the company’s core asset which, as the city’s only casino, generates approximately 70% of its earnings.
However, The Star’s exclusivity in Sydney has come to an end with a second Sydney casino licence issued to Crown Resorts Ltd (ASX: CWN).
Crown Sydney is due to open in February 2021, pending the outcome of an inquiry into its dealings. The upcoming presence of Crown Resorts in Sydney is a major blow to the Star Casino, ending its long-standing monopoly in Sydney.
In response to Crown Sydney’s opening, the Star Casino has spent around $500 million improving and expanding its Sydney facilities, including the premium ‘Sovereign Room’.
The Star Casino’s licence in Sydney expires in 2093, and the firm has retained casino electronic gaming machine (EGM) exclusivity in the NSW casino market. Crown Sydney will therefore operate with a restricted licence and without EGMs.
Star Entertainment has also made moves to protect its exclusive position in Queensland, with its recent $2.6 billion Queen’s Wharf joint venture development in Brisbane.
About the Star Entertainment share price
Star Entertainment shares have been out of favour with investors in 2020, as lockdown restrictions hampered the gaming industry.
As a result, the Star Entertainment share price has dropped by over 21% on a year-to-date basis, with a 52-week high of $4.81.
Similarly, the Crown Resorts share price has also dropped by nearly 20% this year.
Star Entertainment commands a market capitalisation of $3.5 billion.
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Motley Fool contributor Eddy Sunarto has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Crown Resorts Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.