Boost for SkyCity in Adelaide deal
SkyCity Entertainment will spend more than A$300 million ($375 million) upgrading its Adelaide casino after reaching an agreement with the South Australian government.
That agreement - after protracted negotiations - allows it to increase the number of gaming machines and tables, extends the casino's operating licence and its exclusive right to offer table games in the state, and sets new tax rates for its gaming machines and tables.
Shares in SkyCity were up 3.3 per cent to $3.74 late this morning on the news.
SkyCity can increase the number of gaming machines in the casino from 995 to 1500, and more than double the number of gaming tables from 90 to 200.
It had sought a cut in tax rates paid by the casino from A43 cents on every dollar gambled to a rate more in line with the state average in Australia of 28 per cent.
But in a statement announcing the deal, SkyCity said tax rates on non-VIP gaming machines would increase from 34.3 per cent to a rate in line with the gaming tax paid by South Australian hotels but not exceeding 41 per cent.
The tax on non-VIP gaming tables will also rise from 0.9 per cent to 3.4 per cent.
The deal introduces a new tax rate for VIP gaming machines of 10.9 per cent, while the rate for VIP table games will remain at 0.9 per cent.
It allows SkyCity to offer VIP players, including international tourists, exclusive "premium gaming products" in exclusive rooms, and place higher bets than non-VIP gamers.
SkyCity also has the nod to introduce cashless gaming technology for all machines and tables.
SkyCity will also pay A$20m to the state government and install a system so gamers can "pre-commit" to spend a certain amount at tables and machines if they choose, to help counter problem gambling.
The deal appeared to fall over last year when the South Australian state treasurer ruled out a review of taxes in return for SkyCity's investment.
SkyCity chief executive Nigel Morrison said in this morning's statement that it was delighted to reach an agreement after two and a half years of negotiations.
The deal "levels the playing field with our regional competitors, and allows us to offer a competitive and contemporary gaming and entertainment offering".
The company was still working on development plans, but they so far included "Adelaide's first six-star boutique hotel, celebrity and signature restaurants, new car park facilities and world-class VIP gaming experiences", including hotel suites with adjoining private gambling rooms.
SkyCity has also made a controversial deal with New Zealand Government to build a $350m national convention centre in Auckland in return for permission to install more gaming machines at its Auckland casino.
But the process that led to that decision is being investigated by the Auditor-General's Office. The office has postponed its report until next year.
- © Fairfax NZ News