SkyCity shares dive on New Zealand casino license suspension threat

The company said the potential suspension would not impact non-gaming operations such as hotels and restaurants. A decision could take months.

Andy Bowley, head of research at Forsyth Barr, said a 10-day suspension could impact revenue by about $NZ13 million ($12 million) and EBITDA by $NZ7 million. “We believe SkyCity’s share price includes a material regulatory discount, including the prospect of regulatory intervention in New Zealand. This news reinforces the basis of the regulatory discount.”

A licence suspension adds to existing headwinds facing SkyCity, which last month sets aside $45 million for a potential AUSTRAC penalty and is fighting investment giant in court over the value of a fire-damaged carpark at the New Zealand International Convention Centre. Its provision announcement coincided with a $45.6 million write-down of the Adelaide casino licence, which is facing its own regulatory action.

AUSTRAC, Australia’s financial crimes agency, has alleged “serious noncompliance” with anti-money laundering laws and claimed the company allowed 59 suspicious patrons to churn more than $4 billion through its Adelaide casino. A SA government review into whether it should hold a licence is on hold, but the company last week appointed Kroll Australia as an independent expert to review its anti-money laundering and counter-terrorism financing programs.

The company reported a net profit of $NZ8 million for the 12 months to June 30. Revenue from gaming rose 44 per cent, while non-gaming revenue increased 59 per cent to $NZ207.4 million. The result was impacted by an EBIT loss of $94.1 million at the company’s Adelaide casino.


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