SkyCity profits fall

Skycity
Publish: August 21, 2013

SkyCity Entertainment Group, which operates four out of New Zealand’s six casinos, as well as enterprises in Adelaide and Darwin, has reportedly been scammed to the tune of between NZD$2.4 million and NZD$2.7 million by a group of around 20 Asian high rollers.

The group, who ran up the debt playing baccarat over a period of two days and then refused to pay, are believed to have scammed other casinos throughout south-east Asia, although this is the first time any of SkyCity’s premises have been hit. The company continues to work hard to recover the debt.

Casinos operate an information sharing network through which they alert each other to people who might pose a potential bad debt risk, but in this case it appears several members of the scamming group were registered as high rollers with other casinos, which is normally an indication that they can be trusted. In response, SkyCity has said that it is stepping up surveillance at its Auckland casino and has hired a specialist investigator from Macau in order to track down the miscreants.

Nigel Morrison, SkyCity CEO, explained that the casino regularly lends money to high rollers as part of its normal operations (somewhere in the region of NZD$100 million each year), and that it accepted that there were inherent risks in so doing: “These guys have also done this at other properties. It’s a fact of doing business in this space.

“The scam has had an impact on SkyCity’s net profits which have fallen by 8.1% for the year to June 30, from NZD$138.5 million to NZD$127.3 million, although a downturn in the casino’s operations in Adelaide is also thought to have contributed to the decline. It had been estimated that the group’s net earnings would be in the region of NZD$140 million.

The company, which is in New Zealand’s top ten, nevertheless declared a dividend of 10 cents per share, up from 8 cents a share last year and in line with estimates.

The SkyCity Entertainment Group has several major developments in the pipeline, including a deal to build a new convention centre in Auckland in exchange for an extended casino operating licence, and a NZD$300 million refurbishment and extension of its Adelaide premises as part of a revamp of the River Torrens precinct triggered by the upgrade of the Adelaide Oval.

Last Updated May 20, 2015