The Star Entertainment Group Ltd (ASX: SGR) share price rallied 7.8% in early trade today. This was after the company announced the Queensland Government has ended negotiations surrounding the licensing of a second Gold Coast casino. This came before another announcement surrounding COVID-19 that caused the share price to give back its earlier gains.
Star is an Australian gambling and entertainment company. It owns The Star Sydney and Gold Coast as well as the Treasury Brisbane. It also acquired the Sheraton Grand Mirage in a joint venture and manages the Convention and Exhibition Centre for the Queensland government. It was formerly known as Echo Entertainment Group.
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End of negotiations
Star Entertainment made an announcement to the ASX prior to this morning's market open. It advised that the company and the Queensland Government have mutually agreed to end negotiations regarding a second Gold Coast casino licence. Naturally, the company welcomed the decision made by the government.
The state Tourism Minister, Kate Jones said: "Global market conditions are clearly impacting investment at present and I can confirm that this government has no intention of reviving the market process for a new integrated resort – including a second casino – on the Gold Coast". The Star Entertainment share price climbed as high as $2.91 before the second announcement came around lunch time.
COVID-19 update
Star Entertainment's second announcement of the day reported that a patron who visited The Star Sydney on Saturday 4 July has returned a positive test for coronavirus. As a result, the group is working with the relevant authorities and conducting contact tracing which includes staff members. The infection happened soon after the next stage of re-opening at the start of this month.
With the recent easing of restrictions, attendances at the group's casinos have increased and trading performance has understandably improved. However, the re-openings are under strict government controls regarding social distancing and the number of patrons. Although the rally in the Star Entertainment share price had already peaked by the time of the second announcement, the bad news accelerated the downward trend.
Foolish takeaway
The Queensland Government's decision to end negotiations is definitely positive news for The Star Entertainment Group. However, the recent coronavirus case in its Sydney casino has had a negative impact overall on its share price today. The Star Entertainment share price closed at $2.68 which represents a 0.74% fall for the day.
Additionally, the group's share price has been hit hard by coronavirus restrictions, falling nearly 35% over the past 12 months.
With the risks of a second wave of the pandemic and tougher restrictions still looming large, it might not be the end of the rollercoaster ride just yet for the Star Entertainment share price.
