Coronavirus: SkyCity may shut casinos

The Trans-Tasman owner of Adelaide casino warns of falling profits due to COVID-19 and may temporarily close gaming venues.

SkyCity may shut down casinos as coronavirus restrictions deepen. Picture: AFP

Trans-Tasman casino group SkyCity is bracing itself for a coronavirus-fuelled profit hit of up to $NZ55m as revenue plummets while punters stay clear from gaming venues because of COVID-19.

It also says some of its casinos may be shut down temporarily as restrictions tighten on public gatherings.

The operator of the Adelaide casino is now expecting to deliver a net profit of $NZ85m - $NZ100m and is reviewing all non-essential capital expenditure to protect its balance sheet. But it has warned that forecast is fragile and could easily change.

“These ranges are based on the best information currently available and reflect the continued uncertainty regarding the impacts of COVID-19 through to the end of FY20,” said chief executive Graeme Stephens. “The updated guidance also assumes that all SkyCity properties remain open for business.”

“The focus for now is on reacting rapidly to the situation, which is evolving daily, and on ensuring that we can continue to trade in a way that is responsible and protects the thousands of people that work at SkyCity and our customers, largely domestic, who continue to choose to visit us.”

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The downgrade comes a day after SkyCity joined its Australian rivals Crown and Star Entertainment in rolling out social distancing measures, including switching off swathes of poker machines, to limit the spread of coronavirus.

Mr Stephens said the current market conditions as a result of COVID-19 were unprecedented.

“We fully understand and support the priority to slow the spread of COVID-19 in order to save lives. SkyCity always seeks to be a responsible leader in our communities, and we will play our part in working with governments to help and protect our customers, staff and other stakeholders.”

So far this month, gaming revenue has slumped 7 per cent at its Adelaide casino, while non-gaming revenue is down 14 per cent. At its flagship casino in Auckland, total visitation is down 15 per cent and Sky Tower revenue has dived 35 per cent.

Meanwhile, Mr Stephens said its international business had suffered a “substantial decline” with travel bans preventing cashed-up Asian gamblers from entering Australia and New Zealand.

The Australian government has now banned indoor gatherings of over 100 people, tightening bans that had already weighed on the company’s earnings.

Mr Stephens is bracing the company for further restrictions to limit the spread of the virus, including temporary closures of SkyCity’s casinos.

“We anticipate further restrictions on mass gatherings in Australia and New Zealand. We will need to understand these restrictions in more detail as they evolve to ascertain whether they will apply to our properties.

“Casinos are similar to shopping centres in that they have multiple smaller areas within a larger precinct, and these areas can be used in flexible ways to comply with enhanced mass gathering restrictions.

“Additionally, it is possible that a full lock down is implemented in New Zealand and/or Australia, which would lead to the temporary closure of the SkyCity properties.”