SkyCity Gains From High Rollers as Gambling Scam Leaves Debt
Earnings from international business at Auckland rose to NZ$10.5 million ($8.4 million) in the year ended June 30 from NZ$5.2 million a year earlier, even after a NZ$2.7 million provision for the dishonored debts, the company said in a statement. The shares fell the most in 15 months as group net income dropped 8.1 percent to NZ$127.3 million, missing analysts’ estimates.
SkyCity has built its “Horizon” gaming rooms and suites in Auckland to attract wealthy gamblers, with revenue from that business more than tripling to NZ$4.1 billion in the year through June from NZ$1.2 billion in 2009-10. About 20 people who played in Auckland for several days in the first half left without honoring their debts, the company said without providing further detail.
“We would regard this as a bit of a scam, not legal gaming activity,” Chief Executive Officer Nigel Morrison said at a results presentation today. “These guys that have done this have also done it at other properties.”
The decline in group net income reflected a strong prior year that was boosted by Rugby World Cup visitors, Morrison said. SkyCity shares fell 4.2 percent to NZ$3.93 at the 5 p.m. close in Wellington, the biggest drop since May 11 last year.
Auckland’s international business, which operates on a theoretical win rate of 1.35 percent, achieved 1.48 percent in the latest year, SkyCity said.
The better win rate, particularly in the second half when it averaged 1.9 percent, suppressed the level of turnover normally expected from international business, it said. The company also paid a higher level of complementary expenses to players that lost significantly, it said.
SkyCity has named a 25-year veteran in the gaming industry, Craig Ashton, as executive vice president for international business to boost activity in Auckland, Queenstown and Darwin, which are attractive to Asian visitors. He joins in September from the Crown casino in Melbourne.
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