SkyCity says 'reasonable' regulator behind $30m growth

Photo / Dean Purcell

SkyCity Entertainment says it is being dealt a better hand by a more "reasonable" regulator that gave the go-ahead to expansion.

Gambling Commission approvals at the end of last year allowed SkyCity to build three more gaming parlours and villas for top-end international customers on the fifth and sixth floors.

The development - which will open the door to marketing more international customers - is costing about $30 million and will be open in July, said Nigel Morrison, chief executive of the casino company.

Other developments for international customers include the Diamond Room with up to 250 poker machines on top of expanded facilities like the Platinum Room - also for big-spending international customers.

Extra gambling spaces, as well as restaurant and bars, are being developed in time for the Rugby World Cup.

Morrison has been critical in the past about regulation of the sector, arguing that put SkyCity at a disadvantage to the Australian casino sector.

Yesterday he said that under the Labour Government there had been no movement - it was "No, No, No, No, and No", he said.

The approvals granted at the end of last year would help the international business.

Gamblers - most of them from Asia - came for four or five days and spent on average about $17,000 and were good for the New Zealand economy, he said.

He said the new gambling parlours would "ease congestion" on the main casino floor and allow the casino to meet demand at key times for international gambling custom, such as Chinese New Year.

Yesterday, Morrison said the New Zealand retail market was still "challenging".

But there were signs of momentum for consumer behaviour in the run up to the Cup, with revenue up 9 per cent in the first six weeks of the second half.

Analysts approached by the Business Herald said they were encouraged by early indications for the second half and the early impact of a new focus on international customers - higher spending gamblers who were flown in to gamble.

Table games at the Auckland casino were down because these customers were in professions and self-employed groups that were being hit in the current economy. But there has been no fall in poker machine revenue at Auckland.

SkyCity Entertainment also owns casinos in Adelaide, Darwin, Hamilton and a half share in the Christchurch casino, as well as hotel and entertainment venues in Auckland.

Morrison said in the interim results that revenue had grown in Adelaide and Hamilton, was steady in Auckland but softer in Darwin because of the smoking ban there.

But the Auckland casino delivers nearly half of the group revenue and two-thirds of earnings before interest, taxation, depreciation and amortisation.

In the past two years the casino company has taken an expanded profile in the Auckland CBD and is believed to be front-runner for a government contract for the $200 million-plus national convention centre.

Last week Morrison revealed expansion with bars and restaurants in Auckland's Federal St retail precinct to open in August.

Entertainment and conference developments will contribute to revenue but the core business remains gambling, and poker machines provide the best margins.

SkyCity Entertainment closed at $3.29, down 4 cents.