SkyCity will make up to $42 million a year from extra poker machines and other concessions in exchange for its $350 million investment in a national convention centre, a leading investment bank estimates.
The Government says its controversial deal with SkyCity to build the 3500-seat centre in Auckland will generate an extra $85.4 million a year in tourism spending, employ 1000 during its construction phase, and create 800 jobs when it is up and running.
However, opponents say the 350 to 500 extra gaming machines SkyCity is reportedly seeking will create as many as 400 new problem gamblers a year and that the casino already has a patchy record on host responsibility.
Labour leader David Shearer attacked Prime Minister John Key in Parliament yesterday over the deal, which will require changes to legislation.
He cited a recent Goldman Sachs report which estimated SkyCity would make $23 million to $28 million a year of additional profit from the increase in the number of poker machines.
But the report says the deal with the Government will generate combined annual returns of 8 per cent on its $350 million investment, rising to 12 per cent once the centre is up and running.
That is the equivalent of $28 million a year in after-tax profit, rising to $42 million when the centre is operational.
Goldman Sachs analyst Marcus Curley, who wrote the report, said the estimates were based on media reports of between 350 and 500 additional gaming machines.
SkyCity is also understood to be seeking an extension to the term of its licence.
Meanwhile, Mr Shearer also attacked Mr Key on his claims casinos were safer gambling environments than pubs and clubs.
Mr Key responded by saying a University of Adelaide academic considered SkyCity's host responsibility programme "as probably the most advanced in the world".
Economic Development Minister Steven Joyce, who is in charge of negotiations, yesterday defended the fact that the casino returns only 2.5 per cent of its profits to the community compared with the 37 per cent community gaming trusts are obliged to pay.
"There are a range of different levies that are paid by the casinos versus the non-casino gaming machines."
Unlike SkyCity and other casinos, the gaming trusts did not pay company tax or the specific casino gambling levy, said Mr Joyce.
PROS AND CONS
350 to 500 new gaming machines at SkyCity means:
* $28m a year in additional net profit initially, according to Goldman Sachs.
* $42m a year once the convention centre is fully operational.
* 280 to 400 extra new problem gamblers each year, according to the Problem Gambling Foundation.
* 22,000 additional international visitors, according to Govt.
* $85.4m a year in additional tourism revenue.