SkyCity Warns About Decline in 2024 Earnings
SkyCity Entertainment Group has released a press release stating that its EBITDA (earnings before interest, taxes, depreciation, and amortisation) could decline in its 2024 financial year. The statement comes after previous announcements of an increase. In its latest update, SkyCity Entertainment Group reports an adjusted EBITDA of between NZ$290 million and NZ$310 million.
The update comes after an adjusted breakdown of the performance over the first 5 months of 2023. The Auckland-based operator prepares its stakeholders to prepare themselves for a potential adjustment of $310 million. This year promises to be better with a moderate increase projected for the financial year of 2024. Earnings are however expected to be less significant as a result of a decrease in electronic gaming machine (EGM) revenue across the 5 different venues it offers throughout the country.
The land-based operations of SkyCity are also feeling ongoing pressure of the increasing cost-of-living pressures and economic uncertainties. In economically uncertain times, expenses on entertainment and gambling are most likely to be affected.
The country’s biggest gambling and entertainment company also reports disappointing performance in its Adelaide branch. As a result, SkyCity is seriously taking into account that the revenue will turn out to be lower than expected whilst legal issues remain troublesome. It is therefore revising its expenses in Australia.
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SkyCity’s Online Gambling Plans
At the same time it’s preparing for a possible future regulation of online gambling in our country. Possible regulation of iGaming in New Zealand is still in a very early stage and will take years to be concluded, but it nevertheless states to set aside a portion of its budget for future activities. It adds that it will stay positive about earning in the next few years, which it refers to as a medium-term growth in revenue. More details will be included in the FY24 interim results release, which is expected next month. It remains unclear whether this report will also include more information about the launch of a NZ online casino.
It already offers the SkyCity online casino which was launched in August 2019 by SkyCity Entertainment Group, an offshore operated company. Gambling operators are not allowed to offer online gambling products in New Zealand but can target Kiwis when operated offshore. With potential legislation coming up, SkyCity would be allowed to operate their website in the territory of New Zealand. Currently located in Malta and working with a licence from the Malta Gaming Authority (MGA), SkyCity could move its operations to New Zealand, offering its gambling products with a licence issued by a local regulator.
Suspension in New Zealand
SkyCity underlines that the current projections do not include an impact of a possible suspension for its activities in New Zealand. In September 2023, the secretary of the Department of Internal Affairs warned to suspend SkyCity’s gambling licence for a period of up to 10 days. Three SkyCity land based casinos would be affected by the decision that concerns subsidiary SkyCity Casino Management Ltd — responsible for the operation control of the branches in Auckland, Queenstown and Hamilton. SkyCity adds that a suspension would not impact non-gambling services like bars and restaurants. It could take months before the procedure of a licence suspension is fully concluded.
Turbulent 2023
SkyCity hasn’t only been accused of breaching local regulations in New Zealand but is also facing different allegations in Australia. SkyCity therefore agrees that it has gone through what it calls a “turbulent 2023”.
- In 2022 the year ended with investigations of the country’s Transaction Reports and Analysis Centre with the claim of failing the anti-money laundering (AML) guidelines in its Adelaide branch.
- In May 2023, SkyCity announced an investigation of its Know Your Customer (KYC) and AML programmes which was requested by the Consumer and Business Services (CBS), the gaming regulator in the state of South Australia. In August it announced a provision of AU$45 million (NZ$48,66m) ahead of possible sanction.
SkyCity has also officially announced that its CEO, Michael Ahearne, will resign in March 2024 due to personal reasons. According to the group, Ahearne wants to spend more time with his family. Having held the position of CEO at SkyCity since November 2020, he also served as the chief operating officer from December 2017 until November 2020. The company says it’s carefully looking to find a suitable replacement for the upcoming vacancy.
References
- https://www.nzherald.co.nz/business/fletcher-building-full-year-result-revenue-net-profit-down/L2O3RWMXKFFUFKWQTPGBUNIHLM/
- https://www.stuff.co.nz/business/133125842/sky-city-boss-to-step-down-after-very-complex-and-demanding-period-at-the-helm
