NZ's SkyCity Records NZ$143M Loss

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SkyCity records an NZ$143m loss, with the threat of NZ regulation and licensed competition looming.

SkyCity, the only land-based casino chain in New Zealand, with five locations, has reported a significant financial downturn for the fiscal year ending 30 June 2024, with a net loss after tax of NZ$143.3 million.

SkyCity, the monopolist in the New Zealand land-based gambling landscape, is also active on the online gambling market with its MGA-licensed business SkyCity Online, but the threat of 15 licensed competitors is real, DashTickets.nz reports.

SkyCity could be the bellwether for what will happen to the law-abiding companies active in the New Zealand gambling market.

Adelaide losses join forces with the tax burden increase

A loss is not always a loss, it might as well have been an investment in something in this fiscal year, but in case of SkyCity the loss was mainly driven by a AU$86.2 million impairment on its Adelaide assets - the value was corrected by this amount due to new mandatory card play rules, increased legal and compliance costs, and declining player numbers.

Additionally, it will take a nearly NZ$130 million tax adjustment following changes to New Zealand tax laws that effectively doubled the tax burden on offshore casinos - SkyCity Online is operating out of Malta - by adding an offshore gambling duty to the existing GST tax duty.

The threat of upcoming competition

The New Zealand government intends to auction off 15 licences to online casinos that will be allowed to operate and advertise in the New Zealand market, as TAB and NZ Lotteries retain monopoly on sportsbook, racebook and lottery operations.

This means that SkyCity Online - likely a holder of one of the licences - will suddenly face a competition of 14 players that have invested in licences and are eager to make things happen in the New Zealand market.

At this moment, SkyCity Online had a unique position of being a household name in an unregulated market where no brand was allowed to be advertised in legal mass media such as TV, billboards, newspapers and radio.

While SkyCity Online was technically not allowed to advertise, they had their land-based business that served as the advertising space for their online brand.

This will change when the competition comes in with their marketing campaigns and TV ads, and with time it might even be difficult for an average Kiwi to tell which brands are originally from New Zealand and which are not.

SkyCity is facing challenging times ahead

The restructuring has already begun as SkyCity Entertainment Group prepares for the obstacles that lie ahead. However, the company's core operations are as healthy as ever. The underlying group-wide revenue is stable, with a 0.3% year-on-year increase, reaching NZ$959.6 million.

SkyCity CEO Jason Walbridge said that the results are solid despite the economic circumstances, and that the difficulties of the past financial year included navigating a soft economy and cost-of-living pressures that affected consumer spending in both New Zealand and Adelaide. Walbridge cites the decrease of the spend per consumer as the main problem SkyCity faced in this fiscal year.

Australia and New Zealand are both out to get SkyCity

The past year also saw SkyCity face some regulatory legal action from Australia and, surprisingly, New Zealand. SkyCity reached settlements regarding non-compliance with anti-money laundering and counter-financing of terrorism laws with Australia's AUSTRAC and the New Zealand Department of Internal Affairs, the primary regulator of gambling in the country.

Further regulatory measures can be expected to hit SkyCity. At the moment, SkyCity Auckland will temporarily close for five days in September as part of its agreement with New Zealand's DIA.

One of the things that SkyCity will be expected to do in the following fiscal year is the introduction of a hundred percent carded play across all of its New Zealand casinos. It means that every play will have to go through a player card.

In July, SkyCity agreed to this "voluntary" five-day closure after a DIA investigation which identified 23 incidents where a customer was able to gamble continuously in the casino without detection.