Sky City slams Government controls

Casino operator Sky City says Government regulation is posing the most difficult problems the company has yet faced.

A parliamentary select committee has rejected complaints from Sky City about a regulation requiring gaming machines to warn gamblers about how much they are losing.

Sky City told the Regulations Review Select Committee the restrictions imposed by what is known as the "pop up" regulation - regulation 8 of the Gambling (Harm Prevention and Minimalisation) Regulations 2004 - were "extreme, unreasonable and unprecedented".

It requires gaming machines to include a feature that interrupts play at intervals not exceeding 30 minutes with messages advising how long the session has been in progress, how much has been won or lost, and asking the gambler whether he or she wants to continue.

"These are the most difficult problems that we have faced over the period that we have been operating," Sky City chief executive Evan Davies said."If you were to ask me whether a determined regulator could reduce the value of this business, the answer clearly is yes."

New gaming machines must have pop-ups from October 1 and existing machines by July 1, 2009. Sky City has 2079 gaming machines at its Auckland, Hamilton and Queenstown casinos.

Sky City and the Australasian Gaming Machine Manufacturers Association claimed the Department of Internal Affair's 10 week consultation process over the regulation was fundamentally flawed. They asked for the regulation to be revoked by the Government or disallowed by Parliament.

However, in a 29-page report, the select committee said it was unable to "discern any fundamental defect" in the consultation and the regulation was of the type anticipated by the 2003 Gambling Act.

On May 13, Sky City cut its full-year profit forecast - saying the Government ban on smoking in casinos could contribute to a fall of up to $19 million in annual profit. "There's potential for further earnings downgrades" at Sky City, said Tyndall Investment Management's Rickey Ward. "They just seem to be facing some incredible challenges on that regulatory front at the moment."