SkyCity locks in damages if gambling rules change

20:54, May 13 2013

SkyCity will be in line for hundreds of millions in compensation if a future government rewrites gambling regulations, prompting claims the new convention centre deal is "unconstitutional".

Almost two years after the Government announced it was in exclusive talks with SkyCity for a 3500-seat international convention centre, key details of the agreement were unveiled yesterday.

The 230 extra poker machines and 40 extra gaming tables were fewer than the numbers that had been tipped to be allowed in return for the casino operator paying for the $402 million centre.

But SkyCity was also granted a high degree of certainty over its future profitability, with the venue's licence extended to 2048.

If over the next 35 years regulations are rewritten in a way which affects its Auckland casino, the company will be compensated by the government, by up to its full investment in the centre.

The compensation could be triggered by changes that include Auckland Casino having its hours shortened, its machine numbers cut, its licence shortened or a general increase in the casino tax.


The amount of compensation would be in proportion to the loss of profit available to the company.

The level will progressively drop the further through its licence span that any regulatory changes occur.

Opposition MPs attacked the deal.

Green Party co-leader Metiria Turei said the party would call the bluff of the Government and attempt to repeal the legislation giving the deal power, without compensation to SkyCity.

"We consider this to be unconstitutional; it is a breach of parliamentary sovereignty to lock a government into a commercial deal for 35 years," she said.

"Every government is sovereign, every parliament is sovereign, and could produce legislation that could change the law to take away their right to compensation. That is the risk they run with this sort of dirty deal."

Mrs Turei conceded her party was still awaiting legal advice as to whether it would be possible to repeal the law without compensating SkyCity for its costs.

Labour Party leader David Shearer criticised the deal, saying the party reserved the right to review it.

SkyCity had "hit the jackpot" with the agreement, he said.

"It's got the mother of all deals. A 35-year licence to print money off the backs of problem gamblers.

"That is reckless. It's outrageous that government's hands will be tied to this deal."

Economic Development Minister Steven Joyce said the compensation was fair given SkyCity's investment.

A future government had the option of repealing any law it wished but to do so could risk investment.

"If governments took that approach then ultimately, very quickly, the whole place would grind to a halt because nobody would set up any kind of contract with the government."

Mr Joyce said the compensation clause did not affect the ability to impose a higher problem gambling levy on SkyCity in the future, or force it to introduce new measures to counter problem gambling.

The Dominion Post