South Australia Adelaide Casino Expansion on Hold
New Zealand’s largest casino operator, the Sky City Entertainment Group Ltd., has deferred plans for further expansion of its Adelaide casino in South Australia pending negotiations with the state government on high taxes and over-regulation. Sky City is hoping that more lenient regulations will improve the casino’s business model. It has also stated that the Adelaide Casino is the highest-taxed, monitored and regulated casino in Australia and in addition, is subject to anti-smoking laws which is not the case with other interstate casinos such as Adelaide.
Exemption from anti-smoking laws would boost the casino’s popularity with high rollers - according to Morrison:
“There hasn’t been any dispensation for VIP gaming areas, for high roller areas, in relation to smoking and certainly our main competitors around Australia have that dispensation for VIP gaming clientèle and for international clientèle, you know Asian high rollers and you know we find that’s a bit of a problem as well,” he said.
Unless the state eases some of the restrictions under which the site operates, it is unlikely that any major investment, including construction of an underground car park, estimated to cost $53 Million, would continue. The statement was released by Sky City’s Chief Executive Officer Nigel Morrison.
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In a letter to shareholders, Sky City said it was hard for the casino to perform on a par with other venues because of a constraining regulatory environment.
CEO Morrison, newly appointed since March, is taking a firm line on investment and costs after earnings plunged a year earlier at Sky’s main Auckland casino and losses mounted at its cinema unit. The $53 million car parking project at Adelaide, first mooted in 2003, has been under review since March.
Though revenue and earnings are increasing at Adelaide, and the state economy is strong, the casino Morrison still expects the casino to struggle to compete with the likes of the Crown site in Melbourne and Burswood in Perth without some loosening of the rules it operates under, he said. He gave no comments on the change to these rules that he is seeking from the state government.
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At the same time, the company’s Adelaide and Darwin casinos appear to be benefiting from Australia’s commodities boom; however, Morrison has stated that New Zealand companies are spending less on accommodation and entertainment as the local economy slows. The South Australia Government has stated that it believes in a robust regulatory regime for all gaming outlets, including the Adelaide Casino.
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