Battling for the high-rollers

By SIMON HENDERY

Christchurch Casino is continuing its campaign to stop gambling heavyweight SkyCity buying into its business.

The latest salvo in the war over a 40.5 per cent stake in the South Island operation comes in the form of a weighty objection to the deal which Christchurch Casino has lodged with the Commerce Commission.

SkyCity Entertainment Group is seeking the commission's approval to buy the stake from London-based Aspinall Group for $93.75 million.

The Christchurch holding would give it a stake in five of the country's six casinos, including an indirect share in Dunedin's casino, which is part-owned by the Christchurch business.

What is clear from both SkyCity's application and Christchurch Casino's submission opposing the deal is the importance casinos put on wooing their most lucrative market - the high-rolling gambler.

In its bid to convince the commission that its buying in to Christchurch would not substantially lessen competition in the relevant markets, SkyCity argued the market for "premium customers" - those enticed by complimentary travel, accommodation and elite VIP gaming rooms - extends beyond New Zealand.

"If there was a reduction in the existing complimentaries offered to premium customers to travel to New Zealand casinos outside their local centre, customers would travel to the Australian casinos [principally the casinos in Melbourne, Sydney, the Gold Coast and Brisbane] that offered the "market rate" of incentives in preference to the New Zealand casinos," its submission said.

"They may also travel to casinos in the Asian region. Competition from these casinos provides a greater constraint on New Zealand casinos' ability to lower the incentives/services offered to premium customers to attend casinos outside their area than do the existing casino options in New Zealand."

SkyCity defined premium customers as those spending more than $2000 on each visit to a casino.

Although it has provided the Commerce Commission with breakdowns of the number of high-rollers who visit its casinos and the percentage of total revenue they generate, it has requested those figures be kept confidential.

It said in the past five years it has stepped up its efforts to attract high rollers from Australia and Asia, and now has representatives in Sydney, Hong Kong, Thailand, and Singapore.

But Christchurch Casino's submission argued it "competes vigorously" for high-rollers and has won players over from SkyCity Auckland since introducing a travel card scheme in August last year.

It has also asked the commission to keep some financial information secret but says: "Because of the fixed cost nature of [the casino's] business, the income stream from premium customers is vital to its profitability."

Christchurch Casino said it had plans to increase its share of the VIP gambler market and had recently completed a $500,000 refurbishment of its Club Aspinall gaming room.

It intended spending $720,000 on two smokers' balconies for premium players once new smoke-free legislation came into force in December, and planned a $22.5 million expansion of the casino, including a new cabaret and entertainment centre which would have spin-offs for the VIP market.