SkyCity faces casino licence ban across its New Zealand empire, shares tumble 17.5pc

Bad behaviour among Australian casino operators has spread across the Tasman with SkyCity facing a suspension on its three city gaming empire.

Australia’s casino carnage has spread across the Tasman, with New Zealand’s Department of Internal Affairs seeking to ban SkyCity’s gaming licence after a former customer alleged it had breached its responsible gambling obligations.

SkyCity shares tanked more than 17.5 per cent to $1.79 on the ASX in morning trade on Monday, following the New Zealand government’s announcement.

But it remains the biggest ASX-listed casino, with market value of $1.63bn, slightly ahead of embattled Star Entertainment’s $1.59bn.

The development came a week after SkyCity appointed a forensic investigations firm to review and oversee compliance with anti-money laundering and counter-terrorism financing laws at its Adelaide casino.

SkyCity has set aside $45m for potential penalties resulting from its alleged breaches of anti-money laundering and counter-terrorism financing laws, but warned its exposure could be “significantly higher or lower” depending on how the matter progresses in the Federal Court.

The company has also written down the value of its Adelaide casino licence by $45.6m amid a wider crackdown on Australian casino operators.

The New Zealand action is more significant, given the bulk of SkyCity’s operations are across the Tasman, with the company running casinos in Auckland, Hamilton and Queenstown.

The NZ Department of Internal Affairs is seeking a 10-day ban on its casino operators licence after it received a complaint last year from a gambler, who claimed the company breached its responsible gambling obligations in relation to continuous play at its Auckland casino.

The NZ Gambling Commission will now rule on a suspension, with SkyCity warning investors it might take several months for a decision to be reached.

“SkyCity will fully co-operate with the secretary (of the Department of Internal Affairs) in relation to the application and process. Given that the application is before the commission, it would be inappropriate for SkyCity to comment further on the application and allegations at this stage.”

The company said if the commission approved the suspension application, it would not affect its non-gaming operations, including its hotels and restaurants.

The suspension application comes after Australia’s financial crimes regulator Austrac launched civil proceedings against SkyCity in December over alleged serious and systemic non-compliance with anti-money laundering and counter-terrorism financing laws, with each potential breach attracting a maximum penalty of between $18m and $22.2m.

Austrac claimed SkyCity failed to undertake the required due diligence on customers on 124 occasions from December 2016, while also alleging an “innumerable” number of breaches relating to the company’s anti-money laundering and counter-terrorism financing program.

SkyCity said last month the early stage of proceedings made it difficult to accurately estimate the company’s potential exposure.

Last week, the company reported it had swung to a $NZ8m ($7.4m) annual profit from a $NZ33.6m loss in 2022. Revenue jumped nearly 45 per cent to $NZ926.2m, and SkyCity said it would pay a final dividend of NZ6c on September 22.