New Zealand-based gaming operator SkyCity Entertainment is getting back to normal. The lifting of COVID-19 travel restrictions has helped it report a substantial revenue increase this year, but could still face financial issues over pending fines in Australia.
SkyCity reported a 44.9% year-on-year increase in revenue for the 12 months from July 2022 to June 2023. The final tally for the period was NZD926.2 million (US$551 million).
EBITDA (earnings before interest, taxes, depreciation and amortization) jumped an impressive 71.1%, closing at NZD926.2 million (US$551 million). However, its net profit was just NZD8.0 million (US$4.8 million) after taxes. That’s still a lot better than the NZD33.6 million (US$19.98 million) loss it reported in the prior period.
Much of that has to do with an investigation by the Australian Transaction Reports and Analysis Center (AUSTRAC). The financial watchdog is looking into whether the company employed money-laundering tactics similar to those that landed Crown Resorts and Star Entertainment in trouble.
Revenue on the Rise
SkyCity reported a 51% year-on-year increase in its gaming revenue, taking in NZD759.4 million (US$452 million). Electronic gaming machines accounted for 50% of the total and increased by 38% compared to pre-COVID-19 activity.
Table games earned NZD231 million (US$137 million), which was 50% more than a year earlier. However, the figure is also 11% lower than pre-COVID-19. Non-gaming revenue saw the biggest year-on-year increase, reaching a 59% jump to NZD207.4 million (US$123 million).
SkyCity Auckland has consistently been the company’s primary earner, and this didn’t change in the new period. Gaming revenue saw a year-on-year increase of 70.8%, to NZD444.9 million (US$265 million). Non-gaming revenue skyrocketed 76.8% to NZD123.9 million (US$73.7 million).
As SkyCity waits to learn its fate in Australia over its SkyCity Adelaide casino, the property is helping it earn extra revenue. Gaming revenue jumped 22.2% to AUD170.8 million (US$110 million), while non-gaming revenue registered a 46.3% improvement to AUD65.4 million (US$42.0 million).
One Step Forward, Two Steps Back
AUSTRAC began its deep dive into the operations at SkyCity Adelaide in South Australia (SA) last December. That has led the company to prepare for the worst from the watchdog’s civil case.
SkyCity believes that it could pay as much as AUD45 million (US$29.2 million) provision to settle any eventual fine. That’s how much it has set aside in preparation, and which was reflected in its financial statements as an impairment.
Each violation carries a fine of between AUD18 million and AUD22.2 million (US$11.7 million and $14.4 million). However, as the investigation is ongoing, there’s no indication of what AUSTRAC has in store.
It already had to take a hit for the property when it included an AUD45.6 million (US$29.3 million) impairment write-down for its license in its latest financial report. However, it indicated that neither the AUSTRAC provision nor the impairment would impact its normalized earnings.
SA’s Office of the Liquor and Gambling Commissioner (OLGC) is looking into the company, as well. At that end, SkyCity could face additional penalties once the investigation wraps up.
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