The government of Victoria, the second largest state in Australia, has declared that hotels and clubs will be able to operate gaming machines for themselves beginning in 2012. The news has crushed the share prices of Tabcorp and Tatts Group, the only two companies permitted to operate gaming machines in the state at the moment.
Both companies posted their worst ever one-day losses on Friday, with Tabcorp shares falling 23 percent and Tatts shares falling 32 percent.
"A big chunk of their earnings are about to disappear. The big question is how are they going to recoup lost earnings," said Karara Capital analyst Akshay Chopra told Reuters.
"I don't think the industry will remain in its current form," said added Chopra, noting the gaming firms would have time to pursue acquisitions before 2012, both within Australia and overseas.