UPDATE 1-Echo's $1.4 bln bet in Australia gaming war sends share tumbling
* Echo plans to spend $1.4 bln upgrading Queensland casinos
* Analysts say Echo may be overspending to compete with Crown
* Queensland government considering issuing up to three new casino licences
(Updates with more detail on Echo's plans, fight with Crown for market share, analyst comment)
SYDNEY, Nov 8 (Reuters) - Echo Entertainment Group Ltd unveiled plans to invest A$1.5 billion ($1.42 billion) in its Queensland casinos, sending its shares to an all-time low on Friday as investors fretted it risks overspending to fend off rival Crown Resorts Ltd.
Echo and Crown, controlled by billionaire James Packer, are battling for supremacy in the Australian casino sector as the country seeks to grab a larger slice of the booming Asian gaming market.
Australia's 13 casinos currently capture just one percent of the $34 billion market for high-roller gamblers in Asia annually, but state governments are greenlighting multibillion dollar developments to boost that figure.
The fight between Crown and Echo is moving north after Crown won the first round in Sydney when it received approval from the New South Wales state government for a high roller room in its A$1 billion luxury hotel and residential development.
That spelled the end of Echo's plans to spend A$1.1 billion on new luxury hotels and an expansion of its existing Star casino in the harbourside city, a major blow for the company.
Echo is now switching that investment to turn its existing casinos in Brisbane and the Gold Coast into more luxurious integrated resorts, but analysts said it is paying a hefty price.
Echo shares were down 4.7 percent at A$2.45, in afternoon trade, having earlier fallen as low as A$2.28, as Echo also said subdued discretionary spending continues to impact its revenue growth, analysts said.
"The admission that they need to spend more money and disruptions to their operations will weigh further on short-term earnings," said Invast Australia chief market analyst Peter Esho. "It's not the positive upswing news the market is waiting for."
Queensland state has four casinos currently, with Echo owning three in Brisbane, Gold Coast and Townsville, and Reef Casino Trust owning the Reef Hotel casino complex in Cairns.
The Queensland government said last month it planned to offer up to three new casino licences, with just one of those earmarked for Brisbane - leaving Crown and Echo in direct competition again.
Echo plans to expand its Jupiters Casino on the Gold Coast with a six-star hotel and to transform its current separate Treasury Casino and hotel in Brisbane to a large-scale integrated resort precinct. It may sell its Jupiters Casino in Townsville, which has limited opportunity to upgrade, it added.
Chief Executive John Redmond told shareholders at the company's annual general meeting in Sydney it was an "opportunity to transform our properties in Queensland into world class integrated resorts capable of competing with the best of region."
Crown is yet to provide details of any investment but has already expressed its interest in Queensland.
Crown's continuing pressure was forcing Echo to invest more for possibly lower return, said Karara Capital investment manager Akshay Chopra.
"Crown will probably only do something in Queensland if they get attractive terms, but I think part of its exercise is also about making sure that Echo is not going to generate excessive return from its investment," Chopra said.
Elsewhere in the state, offshore players are joining the race. Chinese tycoon Tony Fung has proposed building a A$4.2 billion casino and resort project in Cairns .
The southern Chinese territory of Macau is the global gambling capital, while the Philippines and Singapore are major regional players.
($1 = 1.0581 Australian dollars)
(Editing By Simon Cameron-Moore)