SkyCity estimates it will have to pay additional casino duty of about A$13m as a result of the ruling. Photo: RNZ / Marika Khabazi
Another day, another regulatory headache for SkyCity.
The South Australian Court of Appeal ruled the casino company must pay A$13 million (NZ$13.8m) in unpaid casino duty, over a long-standing dispute between the company and the treasurer of South Australia.
The matter related to differing interpretations of a 1999 agreement on the tax covering loyalty points used and earned on gaming machines at Sky's Adelaide casino.
The court ruled in favour of the treasurer, finding that credits on gaming machines, resulting from loyalty points, must be included in gaming revenue when calculating casino duty.
It also found that loyalty points earned by customers on gaming machines, must not be deducted from gaming revenue.
As a result, SkyCity estimated it would have to pay additional casino duty of about A$13m to cover the treatment of loyalty points between January 2014 and January 2024.
However, the court also ruled in favour of SkyCity's position that an interest penalty should not be enforced.
The company said that matter would be decided by a single judge of the Supreme Court at a later date.
If the Supreme Court ruled in favour of the Treasurer, relating to the penalty interest payments, SkyCity estimated it may need to pay A$20m in penalty interest.
Impact on earnings
SkyCity said the Court of Appeal's ruling meant it would have a A$2m hit to its underlying earnings in the 2024 financial year ending in June, with the A$13m payment included as a one-off cost.
It said the additional A$2m was likely to be the ongoing duty that SkyCity Adelaide would have to pay.
Despite the additional costs, SkyCity said its full year profit guidance was unchanged at between $125m and $135m, while underlying profit for the full year would likely be between $290m and $390m.
Myriad of regulatory and compliance issues
It was the latest regulatory headache for SkyCity.
SkyCity has set aside provisions to pay a civil penalty and associated legal costs of about $79m in respect of money laundering breaches in Australia, and is also expected to pay up to $8m New Zealand authorities over similar breaches.
SkyCity remained under investigation regarding its Adelaide casino licence and host responsibilities at the Auckland casino.
Speaking earlier in the day, the company's outgoing chief executive, Michael Ahearne, told RNZ the company had set aside money for any compliance issues that may arise.
"We've made provisions for any such penalties which are an estimation of any potential penalties that we may have," he said.