SkyCity Entertainment Group has launched its online gaming site – skycitycasino.com – as it adapts to the changing gaming environment.
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Auckland’s SkyCity casino operator operates the website through a Maltese subsidiary, using a platform, gaming content, managed services and front-end development provided by Gaming Innovation Group, based in Malta.
“While ultimately a regulated online gaming marketplace remains the preferred solution, the launch of the site is another step in our journey of finding opportunities for growth and revenue diversification, addressing a fast-growing new industry that is highly complementary to our land-based businesses and providing customers with a multi-channel gaming experience,” chief executive Graeme Stephens said in a statement.
SkyCity flagged the foray online in May, saying the venture would be a conservative first step, not one that needed to produce a big short-term return.
The company said New Zealanders spend around $160 million a year in online casinos currently provided by international platforms. It supports the regulation of the local online casino market with a licensing regime, appropriate taxes and host liability obligations.
The Home Office is currently seeking input on a discussion paper to introduce a regulatory framework for online gambling and is considering licensing domestic and foreign operators. Currently, Lotto and the TAB are the only two state-licensed online gambling providers in New Zealand.
DIA said there was an 84% increase in offshore online gambling, from $132 million in 2015 to $243 million in 2017, and recent industry estimates point to a largest spend of $381 million over the past 18 months.
This topped the $49m increase in total gambling in New Zealand to $2.4bn in the June 2018 financial year, of which slots accounted for $895m in spending , casinos $578 million, lotto $561 million and TAB $350 million. Other forms of gambling such as charity lotteries, houses and instant games accounted for only $17 million of annual expenditures.
The consultation closes at the end of September.
Should SkyCity become a licensed operator in a regulated New Zealand online casino market, the agreement with GiG allows SkyCity to take on the business-to-consumer components of the business in the same way as it does for its current land activities. .
The bulk of SkyCity’s revenue still comes from its flagship casino in Auckland. In May, it said revenue was up at the Auckland site, although its high-profile international business and Adelaide casino struggled.
The casino operator announces its annual revenue next week and said its normalized net profit will be slightly lower than the $169.9 million reported in 2018, in part due to a higher effective tax rate. Forsyth Barr analyst Chelsea Leadbetter estimates the company will post a normalized profit of $164.5 million on a 0.9% increase in revenue to $1.01 billion.
The shares last traded at $3.96 and have gained 12% so far this year.