SkyCity Adelaide Faces Independent Review
SkyCity Adelaide is the latest Australian casino facing scrutiny from regulators. The independent review comes off the back of Crown Resorts and Star Entertainment having detailed reviews into their operations. Although SkyCity Adelaide says it is squeaky clean, the upcoming review will shed light on any indiscretions.
The news broke on the Australian Securities Exchange, where SkyCity Entertainment is listed.
“Consumer and Business Services (The South Australian gaming regulator) has advised SkyCity Entertainment Group Limited that it has appointed the Honourable Brian Martin AO QC to undertake an independent review of SkyCity Adelaide Pty Limited in accordance to part 3 of the Casino Cact 1997 (SA).”
“SkyCity will fully cooperate with the review and any requests for information and documents. Mr Martin is due to report back to the South Australian Liquor and Gambling Commissioner by February 1, 2023.”
Everyone in the industry expected the inquiry. Why? Because several other states have launched independent inquiries following the lengthy reviews of Crown Resorts and, more recently, Star Sydney. SkyCity Adelaide welcomes the review.
Regulator Explains Reasons Behind SkyCity Adelaide Review
Dini Soulio of South Australia’s Liquor and Gambling regulator explained the reasons for launching the SkyCity Adelaide inquiry.
“Commissions of Inquiry have been undertaken in New South Wales, Victoria, and Western Australia into the casinos proposing to operate in those states, and a further inquiry is about to be commenced in Queensland. Inquiries to date have highlighted significant failings on the part of Crown Resorts as operators of Crown Casinos. In addition, Star Entertainment Group is the subject of a current inquiry in NSW; the inquiry identified significant failings.”
“A number of matters raised to date extend beyond any one organisation and point instead to broader systemic issues within the casino industry. As a result, the Honourable Brian Martin AO QC is conducting an investigation to ensure that the way SkyCity operates demonstrates that the licensee is still suitable to hold the casino licence in South Australia.”
“Mr Martin is a highly respected member of the legal profession. He has conducted reviews of key criminal justice policies in South Australia, including reforms to the handling of major indictable offences in the state’s sentencing discount scheme. I have every confidence he will deliver a report to help us ensure that South Australians can have confidence in the way that the Adelaide casino is operating.”
SkyCity Issues Earnings Guidance
News of the upcoming inquiry had zero effect on SkyCity’s share price. After all, the casino has no prior negative press. However, an earnings guidance press release resulted in the share price jumping almost four per cent.
The company’s financial year ends June 30, 2022, and it is publishing the results on August 25, 2022. SkyCity expects investors to react positively to those results.
“Following recent relaxation of COVID-19 operating restrictions, SkyCity has seen strong performance from its local gaming businesses, particularly in New Zealand. SkyCity’s non-gaming businesses continue to recover, benefitting from positive domestic tourism, particularly during the weekend and holiday periods, and the reopening of international borders.”
“Subject to there being no material changes to SkyCity’s current operating settings before June 30, 2022, SkyCity expects Group normalised EBITDA of between $135-140 million and Group normalised NPAT for between $3.5-7 million.”
Those figures are a far cry from the previous financial year’s reports. Normalised EBIDTA weighed in at $252 million last year, with normalised NPAT some $90.3 million. The 2020 financial year showed EBITDA of $200.7 million and NPAT of $66.3 million.
COVID-related restrictions hit the company hard, especially in New Zealand. In addition, SkyCity Adelaide remained closed for significant periods. Reopening the company’s casinos and a relative return to normality has started the recovery process.
