The Front Page: SkyCity bombshell explained as gambling giant faces troubles in NZ and Australia

SkyCity has been rocked by the potential suspension of its licence.

SkyCity saw hundreds of millions of dollars wiped off its market cap after a surprise threat from the Department of Internal Affairs (DIA) to suspend the company’s casino licence.

The news caught everyone off-guard, including SkyCity bosses, who had made no mention of the investigation in the weeks leading up to the announcement.

NZ Herald property editor Anne Gibson tells The Front Page podcast the DIA asked the Gambling Commission to temporarily suspend the company’s operating licence for a period of 10 days.

While this would cost SkyCity millions in lost revenue, Gibson says the real damage will be to the company’s reputation.

“When the pandemic broke out in 2020, SkyCity chief executive Michael Ahearne said the company was losing $1 million in revenue a day for every day it couldn’t operate its casinos in New Zealand,” says Gibson.

“That would be potentially $10m [in this case], so it’s not really about that. It’s about the name of the business and the compliance with the law.”

SkyCity last month reported $926m annual revenue, marking a huge turnaround from those tough pandemic years.

The company’s problems aren’t only limited to New Zealand, with Australian authorities also taking aim at operations across the Tasman.

“It’s facing some quite serious court action in the Federal Court in Australia,” says Gibson.

“The Australian regulator has laid a series of charges that basically allege that SkyCity [did not comply with] the anti-money-laundering and counter-terrorism provisions of the law in Australia. A very large report issued at the end of last year was quite shocking. It talked about money being brought into the Adelaide casino which was wet and smelled of dirt, indicating it had been buried.”

The report also went into detail about some people, employed in relatively average jobs, gambling tens of millions of dollars – which could be indicative of money laundering.

“Those allegations have yet to be proven, and SkyCity said that it’s co-operating fully with the authorities in Australia. And the company has set aside a sum of $49m to pay for any fines that it might incur in Australia.”

• So, what is SkyCity doing wrong?
• Is this a sign that regulators are taking host responsibility more seriously?
• Should smaller gambling operators be concerned?
• And is SkyCity really doing enough to keep an eye on those who visit its casinos?

For the full story on SkyCity’s legal trouble, listen to the full episode of The Front Page.

The Front Page is a daily news podcast from the New Zealand Herald, available to listen to every weekday from 5am. It is presented by Damien Venuto, an Auckland-based journalist with a background in business reporting who joined the Herald in 2017.

You can follow the podcast at iHeartRadio, Apple Podcasts, Spotify, or wherever you get your podcasts.