Sky City online flutter pays off

By SIMON HENDERY

Sky City has secured a foothold in the potentially lucrative online casino business with a $6 million flutter on an Australian cyber-betting company paying off sooner than expected.

The listed Auckland casino company said in February that it wanted to establish an Australian-based internet business after the Department of Internal Affairs said such a set-up in New Zealand would be illegal.

Sky's options opened up this week with the Australian Federal Government failing in its bid to pass legislation enforcing a moratorium on new online gambling websites across the Tasman.

That leaves the way clear for Canberra-based sports betting company Canbet, in which Sky City has a stake, to launch a new internet-based casino.

Canbet chairman Richard Farmer said yesterday that the company was only days away from applying for an online gaming licence, although the process was likely to take several months.

Sky City spent $A5 million ($6.64 million) in July to buy an initial 7 per cent shareholding in Canbet.

It has the option of raising its stake to 33 per cent (for a further $A35 million) after due diligence, which is still being carried out.

Auckland entrepreneur Eric Watson's private investment company, Cullen Investments, owns just under 20 per cent of Canbet.

Sky City's managing director, Evan Davies, said last night that his company's interest in Canbet was based on its existing sports betting business.

He did not want to make any comment on the internet casino venture because he had not discussed it with Canbet.

The Australian Government's failed legislation, which would have imposed a retrospective 12-month moratorium on new internet casino sites back to May, was defeated by just one vote in the Senate this week.

But Communications and Information Technology Minister Richard Alston said that the Government might still push for a total ban on internet gambling.

An inquiry into the feasibility of a full ban is still being carried out and a spokesman for Senator Alston said that the Government reserved the right to reintroduce the moratorium legislation.

Mr Farmer said Canbet would lodge a claim for compensation if the Government did revive the ban.

Sky City shares closed down 8c yesterday at 675c.