High Rollers Cash In at SkyCity Casinos
The Impact of Effective Tax Rate
SkyCity banked a profit of NZ$160.8 million from its on going operations, up a moderate 1.3% year-on-year. However, it’s actual recorded profit dropped by almost 15%, to NZ$144.6 million, which is partly due to changes being made in the organisation’s effective tax rate.
Like its Australian counterparts, this organisation reports what it calls normalised results, which in this case assumes that VIP gamblers are constantly winning at a rate of 1.35%. They report that this gives a more accurate perception of how their business is going because luck has been factored out. We have not taken this view into account.
VIP Gambling Win Rate Down
In terms of VIP gambling, or International Business as SkyCity terms it, the year’s win rate dropped 1% from 1.32% in the previous fiscal year. This ruined the record IB turnover of NZ$14.1 billion, up 19% YoY, but this turnover was so high partly because VIPs kept winning, and playing because they had more money to gamble with. The net result is that the IB revenue has fallen 40% and earnings have slid 91% YoY to just NZ$3 million.
Local Business Looking Good
In terms of local business, the flagship Auckland property owned by the casino operator reported record revenue because of higher visitation and gaming machine income increasing by 7.4%. The casinos in Hamilton and Queenstown only held their own, however, and the sole Australian venue in Adelaide had earnings drop by almost 7%. This is apparently due to continuing issues around construction and the main floor gaming weakening.
The next earning report from SkyCity Entertainment Group will include a new product vertical to discuss. This is after the recent launch of their brand-new online casino with a license from the Malta Gaming Authority. This debut came after a brand refresh in July 2019, which the company said reflected its latest role, as diverse and dynamic as they are entertaining.