SkyCity Entertainment Group Faces Wins And Losses

SkyCity Entertainment Group Limited is New Zealand's largest leisure, tourism, and entertainment company currently employing close to 4,000 individuals. The group manages several restaurants, bars, hotels, and online and offline casinos in New Zealand and Australia. In operation since 1996, SkyCity has become notorious in recent years. However, it has made the headlines in both a positive and negative way.

Currently, it is in the news for both – one for achieving a profile after a major loss during the pandemic and also for money laundering charges on its Adelaide branch.

Post-Pandemic Revenue Surge

The pandemic affected almost all live entertainment establishments, especially tourism. Moreover, New Zealand had strict lockdown protocols. As that is the main area the group operated in, it took a massive hit reporting a loss of $33.7 million.

Recently, the company announced a profit of $22.8 million after covid measures were eased. A year and a half after tourism surged and casinos became operational again, the company publicly announced its net profit after tax for December 31, 2022. Reportedly, there was a 60% increase in profits from $289.8 million in HY22 to $462.6 million in HY23.

The CEO of SkyCity, Michael Ahearne, stated that he was very ‘proud of the SkyCity team’ for working hard and delivering ‘exceptional customer service’. He added that the company has noted a strong recovery in business operations, especially in the offline casino segment.

An increase in foreign tourists has led to the performance levels being at par with the pre-Covid times. The company also expects the profits to continue in 2023 and is currently undertaking several projects to keep up the revenue stream.

Lawsuit for Money Laundering

But at the same time, the company is also facing a lawsuit in its Adelaide branch related to money laundering. SkyCity Adelaide Casino allegedly allowed gamblers to launder money on its property for over 6 years. Reports state that there were over a dozen gamblers involved and a total of A$4 billion was laundered over that time.

The subsidiary is facing legal action for it and has acknowledged it publicly. The investigation was conducted for over a year starting from June 2021 up until the 7Th of December of the next year. The Australian Media predicts that the company may have to pay a fine of up to $2 billion.

According to documents lodged in the Federal Court of Australia in December, the casino failed to monitor signs of money laundering on its premises, allowing players to gamble with wet and dirty money that looked to have been buried previously.

Major red flags that offline casinos are told to keep an eye out for in gamblers who could potentially be laundering money are when they are using cash from plastic bags or garbage bags, dirty notes, or money that seemed to have been buried, cash bundled together with rubber bands in irregular straps, and more.

The casino also did not do a good job of knowing its customers who were spending millions. One particular individual listed his occupation as a truck driver but ended up gambling over $44 million at SkyCity Adelaide Casino.

Previous Brush with the Law

This is, however, not the first time that a casino under SkyCity has been accused of not complying with gambling standards. Previously Auckland Casino was identified as having a number of failures in addressing gambling harm, despite previous warnings to rectify the issues.

According to an audit finalized in 2021 by the Department of Internal Affairs (DIA), the casino did not meet standards in 9 out of 10 compliance areas. The staff was also noted to be ‘dismissive’ of problem gambling issues and “failed” to identify excluded gamblers. There is also a high probability that underage players had access to the casino.

One highlighted instance states that a gambler who was banned managed to play pokies for 14.5 hours and 28 hours straight before any staff member noticed. The processes for identifying excluded or banned players at Auckland casino were note to be deficient.

With the increase in revenue, SkyCity needs to focus more on its compliance standards and taking its training to a new level to get its staff to keep an eye out for problematic gamblers and prevent money laundering, underage gambling, or identity theft.