Echo Entertainment has secured its position in Brisbane by beating billionaire James Packer's Crown Resorts for the rights to build a new casino resort in the Queensland capital.
Echo operates the existing Treasury casino in Brisbane, Jupiters on the Gold Coast and The Star in Sydney.
In July 2013, the NSW government rejected Echo's proposal to further develop The Star as Sydney's only casino resort, in favour of Crown's proposal for a new luxury hotel and VIP-only casino at Barangaroo.
But Echo and Hong Kong-based partners Chow Tai Fook Enterprises and Far East Consortium (Australia) have now beaten Crown for the rights to build a casino resort at Queen's Wharf in Brisbane.
Morningstar analyst Brian Han said the win in Brisbane would protect a significant amount of Echo's earnings stream.
"It's very good (for Echo) in the sense that it has defended its turf in Brisbane, especially in light of what happened in Sydney," Morningstar analyst Brian Han told AAP.
"In the long term, there will continue to be a positive halo effect about this announcement and about how much earnings in Brisbane could step up when this mega-project is finished."
Echo has not disclosed the projected cost of the new casino resort.
The development at the Queen's Wharf precinct will deliver "world class" gaming facilities, five new premium hotels, three residential towers and a pedestrian bridge to South Bank.
Mr Han said Echo's earnings from gaming operations in Brisbane will have to rise significantly to justify what is expected to be a huge capital investment in the casino resort.
It had been expected that Echo would win the Brisbane battle against Crown because the Crown proposal would have required the Queensland government to issue a new gaming licence to Crown and significantly increase the number of new poker machines.
But the loss in Brisbane was not a disaster for Crown because it had a big pipeline of development projects already, which were costing a lot of money.
Echo said the new casino resort could transform both Brisbane and the company.
"This is also the most significant investment ever undertaken by an existing casino licence holder in Australia and follows major redevelopment programs announced and underway on the Gold Coast and completed in Sydney," Echo chairman John O'Neill said.
Echo will contribute 50 per cent of the capital to the development of the casino resort. CTF and FEC Australia will each contribute 25 per cent.
Echo expects to fund the project through existing and new debt facilities and free cash flow generated by the business.
Construction of the new casino resort is due to begin from 2017 and last until 2022.
Shares in Echo were five cents lower at $4.79 at 1306 AEST.
Crown shares were off one cent at $13.36.
Share
