April 22, 2024

More SkyCity Bigwigs Resign

In a surprise development, SkyCity Entertainment Group faces another significant setback as David Christian, the Chief Operating Officer, decides to leave the company. This follows the earlier exits of the company’s CEO, Michael Ahearne, and CFO, Julie Amey, marking another departure from the casino operator’s senior ranks. 

Christian, who had been with SkyCity since 2005 and became COO in February 2021, left his position on April 12, 2024. His departure has impacted investor confidence, leading to a 1.33% drop in SkyCity’s shares to $/€1.85, resulting in an 18.14% decline over the past year. 

In response to his departure, SkyCity has acted swiftly to secure stability, with CEO Callum Mallet stepping in to cover Christian’s duties until a permanent successor is appointed. Callum Mallet praised David’s extensive tenure with the company, highlighting his contributions in many senior positions. Specifically, David’s leadership at SkyCity Adelaide during a particularly challenging period showcased his resilience and strong management skills. 

According to iGB (iGamingBusiness.com), SkyCity board chair Julian Cook stated, “On behalf of the SkyCity Adelaide board and the SkyCity board, I thank David for his tireless efforts and dedication to SkyCity and wish him well.” 

However, these departures represent a major upheaval in SkyCity’s leadership, sparking conjecture and doubts about the entertainment conglomerate’s future direction. Adding to the news, the company behind this best online casino also faces allegations of noncompliance with anti-money laundering and terrorism funding legislation in Australia and New Zealand. 

Uncertain Times for SkyCity

As SkyCity Entertainment Group encounters multiple setbacks and managerial changes, uncertainties surrounding the future of this operator continue to grow. Over the last year, the company has seen severe instability, including the resignation of several senior executives, including CEO Michael Ahearne.  

Ahearne formally left the company in March, with Mallet taking over interim leadership while the operator searches for a permanent replacement. Mallet was formerly the chief operating officer for New Zealand, and SkyCity appointed Brad Burnett to replace him on an interim basis. Burnett was previously the general manager for table games at the Auckland facility. 

SkyCity announced in February 2024 that it expects to pay an additional $/€13 million in casino duty after the South Australian Court of Appeal ruled that gaming machine credits earned through loyalty points should be counted as gaming revenue when calculating casino duty at the SkyCity Adelaide Casino.  

Subsequently, the ruling will impact its underlying group EBITDA by approximately $/€2 million, with the remaining additional casino duty payable for previous periods to be paid as a one-time expense. 

SkyCity’s subsidiary is facing a civil penalty prosecution by the New Zealand Department of Internal Affairs after the company was suspected of violating anti-money laundering and terrorist funding legislation in both Australia and New Zealand. Besides that, the company will also go before Australia’s Federal Court in June. 

Background of SkyCity

Established in 1996, SkyCity is a subsidiary of SkyCity Entertainment Group Limited, one of the world’s leading tourism, leisure, and entertainment companies. In addition to the online casino, which is available to players in New Zealand and Australia, the company also runs land-based casinos in Auckland, Hamilton, Queenstown, and Adelaide. 

The company is publicly traded on both the New Zealand Stock Exchange and the Australian Securities Exchange. Its shareholder base includes institutional and individual investors. As a result, the company employs strong corporate governance standards overseen by its board of directors to guarantee compliance with guiding principles. 

Brick-And-Mortar  

SkyCity operates entertainment complexes in New Zealand, more specifically in Auckland, Queenstown, and Hamilton; as well as in Adelaide, Australia. These venues provide a variety of services, including gambling areas, entertainment, and high-end bars, with the goal of appealing to both local and international visitors.  

There are also luxury hotel accommodations at the resorts in Auckland and Adelaide. Furthermore, some places have excellent dining options, with the dinner menu allowing you to sample items before making a decision. Most importantly, visitors can join the elite Premier Rewards club, allowing them to participate in special draws and events and enjoy great-value meals and beverages.  

Online Casino Platform 

In addition to its land-based casino activities, SkyCity Online Casino provides New Zealanders with a fun and immersive low-deposit casino experience. The website first went live in 2019 and has since been the go-to betting hub for New Zealanders due to its incredible game offering, professional support channels, and responsible gambling practices. 

Players can enjoy over 1,000 slots, card games, and live dealers from the world’s leading casino software studios, the likes of Evolution, NetEnt, Pragmatic Play, and Microgaming. There’s even a wide selection of bonuses and promotions available to claim once registered. Find out more about the online platform by checking out our SkyCity Casino Review

Regulatory Scrutiny and Legal Disputes

The DIA of New Zealand has announced plans to file civil penalty proceedings against SkyCity Entertainment Group in the High Court. This legal move increases the company’s problems, potentially indicating regulatory attention and financial consequences.  

SkyCity Casino Management Limited is accused of failing to comply with the Anti-Money Laundering and Countering Financing of Terrorism Act 2009. In the event that such claims were proven partially or completely true, SCML could be fined an amount of up to $/€8.0 million. 

Draft filings outline five causes of action deemed “important” compliance concerns under the Act. SkyCity stated that these issues are primarily historical, with some having previously been self-reported to the department.  

SkyCity’s net debt was $/€443 million in June, with an additional $/€390 million in undrawn debt reported. In last year’s annual reports, the company stated that it expected that sum to rise due to some big one-time payments but that it would remain comfortably within its debt limits. 

However, things could get worse before they improve. SkyCity has written down the value of its Adelaide casino by $/€45.6 million. However, an independent examination by the South Australian government into whether it should be stripped of its licence is still pending. It will not begin until a settlement with AUSTRAC is struck.  

Asset sales must be discussed among the executives attending, at the very least. On the other hand, it might not be easy to find a buyer willing to pay anything near the middle market for an asset with as many barnacles as Adelaide. 

In New Zealand, online casino regulators are still considering suspending SkyCity’s licence for 10 days due to alleged violations of regulations governing reducing gambling harm to customers and incidences of ongoing play.  

Additionally, SkyCity’s warnings about a likely fall in EBITDA in 2024 serve as a sobering reminder of the looming economic issues. Such forecasts reflect the considerable uncertainties confronting the entertainment and hospitality industries and highlight the importance of bold leadership and strategy recalibration in surviving these tumultuous conditions. 

Despite recent problems, SkyCity remains a significant player in the regional entertainment industry, ready to manage new challenges with tenacity and agility. SkyCity announced this week that Jason Walbridge, a strategic adviser to Aristocrat Leisure, will become the company’s CEO in July. He’ll arrive at a moment when the rollercoaster has little chance of slowing.

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