Shares in Australian hospitality operator Endeavour Group took a steep dive today, heading towards their lowest close in history. The drop comes after the Victorian state government announced stricter regulations on gaming machines.
During Monday’s trading session, the stock plummeted by 10%, reaching 5.62 Australian dollars (US$3.84). As a result, the group’s market capitalization suffered a significant blow, losing over A$1 billion. Endeavour Group, which emerged as a separate entity from supermarket operator Woolworths in 2021, now faces the challenging consequences of Victoria’s regulatory changes.
The state government of Victoria, Australia’s second-most populous state, recently unveiled plans to revamp its electronic gaming-machine regulations. These reforms include the implementation of restricted opening hours for venues containing these machines and a reduction in the maximum amount that gamblers can wager.
E&P Financial analyst Phillip Kimber has projected that Endeavour Group’s net profit for fiscal year 2024 will decline by 3% with every 10% decrease in Victorian electronic gaming-machine revenue. In fiscal year 2022, Endeavour reported a net profit of A$495 million. Earlier this year, they disclosed a net profit of A$364 million for the first half of fiscal year 2023, representing a 17% increase compared to the previous year.
Despite these recent triumphs, the company now faces an uphill battle amidst the tumultuous changes brought about by the tighter gambling regulations in Victoria.