In an announcement published on the Australian Securities Exchange (ASX) website, SkyCity disclosed the decision of the Australian Court of Appeal regarding the company’s casino duty dispute with the Treasurer of South Australia. The dispute in question concerned each party’s interpretation of a 1999 casino duty agreement, as the Treasurer of South Australia has argued that loyalty points clients earn and utilise during gameplay should be included in the SkyCity Adelaide casino’s gaming revenue and thus affect the casino duty SkyCity is mandated to pay, while SkyCity has argued otherwise.
Seeing as the Court of Appeal ruled in favour of the Treasurer, SkyCity will need to pay AU$13 million in duty costs accumulated over the course of 10 years. The Court of Appeal’s decision also stipulates that, from now on, SkyCity will always be obligated to pay a casino duty amount based on figures that do not exclude loyalty points.
According to SkyCity’s estimates, the company will pay an additional AU$2 million in casino duty for FY24 as a result of the ruling. Calculations point towards this figure being a yearly addition to the company’s casino duty obligations. While the costs are notable, SkyCity still projects that its underlying FY24 EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortisation) will still fall within the range of NZ$290 million to ZN$310 million. In addition, the company’s net profit after tax will range between NZD$125 million and NZD$135 million, according to estimates.
SkyCity is Facing Multiple Regulatory Struggles
In spite of SkyCity’s loss when it comes to the loyalty points interpretation of the casino duty agreement, the Court of Appeal did rule in favour of SkyCity in relation to the agreement’s interest clause. The said clause, if it were enforced by the Court of Appeal as argued by the Treasurer, would have resulted in SkyCity paying interest penalties on its additional casino duty obligations. Thus, given the size of the company’s casino duty costs, the financial penalty would have amounted to a staggering AU$20 million. It should be stressed, however, that this is not a definitive win for SkyCity. Instead, it gives SkyCity the opportunity to contest whether the clause can be enforced. The final ruling will be made by Australia’s Supreme Court in the future.
Moreover, the casino duty agreement issue is just one of several regulatory headaches SkyCity has had to face recently. Earlier this month, it was revealed that New Zealand’s Department of Internal Affairs is planning on filing civil penalty proceedings against SkyCity’s subsidiary, SkyCity Casino Management Limited, in association with alleged anti-money laundering (AML) violations. This situation emerged amidst the casino’s ongoing licensing struggles surrounding its New Zealand casino establishments that resulted from breaches of responsible gambling regulations. Last but not least, SkyCity has also come under additional legal scrutiny in Australia after an investigation by the Australian Transaction Reports and Analysis Centre (AUSTRAC) revealed that the company has allegedly breached AML-associated laws.
- Author
Daniel Williams
