SkyCity’s $18m investment in compliance
SkyCity Entertainment has more than 80 staff on its payroll to manage compliance and regulatory issues, with group costs totalling $18 million last year.
The group employs about 4500 staff across its transtasman properties.
Outgoing chief executive Michael Ahearne said SkyCity had invested heavily in anti-money laundering, internal systems and host responsibility, which had increased “underlying costs” by three times the amount three years ago.
The dual New Zealand and Australian listed gambling and hotel operator, which held its annual general meeting yesterday, faces regulatory fallout from investigations over the past financial year.
Its Adelaide casino is being investigated by the Australian financial crimes unit Austrac, while the South Australian regulator, Consumer and Business Services, also reviews the property’s suitability as a licence holder.
In August, the company booked an A$45m ($49.5m) provision for a potential Austrac civil penalty, including legal costs, although Forsyth Barr analysts suggested this was a “best case” scenario and the true cost could be closer to $150m.
A month later, the New Zealand Department of Internal Affairs applied to the Gambling Commission to suspend SkyCity’s casino licence for as many as 10 days at its Auckland, Hamilton and Queenstown properties.
The market reaction to the move, based largely on a complaint dating back to 2017 by a SkyCity Auckland customer, resulted in the company shedding $296m from its market capitalisation in one day, with the share price tumbling from $2.33 to $2.02. The stock was trading up 1.6 per cent at midday yesterday, at $1.91. Analysts pegged a 10-day shutdown as likely to cost the casino group between $10m and $20m at an earnings before interest, tax and amortisation (ebitda) level.
Ahearne, who leaves the company after six years next March, said chief among its enhancements was a facial recognition system installed at both its Auckland and Hamilton gaming floors to monitor players’ presence and “continuous play”.
SkyCity is also in favour of online gaming regulation that is “appropriate” in the New Zealand context, and Ahearne said the firm was encouraged by National’s tax policy, which provision for an online gaming tax.
He said the group was still seeing modest year-on-year increases in ebitda across its properties, and the company was looking forward to the launch of Auckland’s 300-room Horizon hotel next March as a precursor to the opening of the NZ International Convention Centre in 2025.