Cybercasino on the cards for Sky City

By KARYN SCHERER

Auckland-based casino operator Sky City plans to take a punt on Australia's competitive gaming sector, possibly including a foray into internet gambling.

The company was confirmed yesterday as the successful bidder for the Adelaide Casino, which is being sold by the South Australian Government's superannuation manager, Funds SA.

It is believed to have beaten around 20 rivals with a bid of $A180 million ($230 million).

The Business Herald revealed three weeks ago Sky City was one of several potential buyers short-listed for the sale.

Australian analysts had estimated the casino would sell for between $A150 million and $A200 million, although one New Zealand analyst said yesterday the bid was at the high end of expectations.

The Adelaide Casino is believed to have taken around $A90 million from punters in its last financial year, with earnings before interest, tax, depreciation and amortisation of around $A21 million.

With around 900 staff, 71 tables and more than 760 slot machines, it is around half the size of Sky City's Auckland complex.

The purchase, which has yet to be approved by South Australian gaming authorities and Australia's foreign investment review board, is expected to be completed within the next four months.

The deal means Sky City is essentially buying an operator's licence which is valid for 85 years and excludes local competition for at least 15 years.

It will increase its debt to cover the purchase, taking its total debt to around $500 million.

Its decision to look across the Tasman for further investments is believed to have been sparked by fears the new Government could clamp down on gambling in this country.

The company has played down concerns about a possible increase in gaming taxes which have hampered its share price in recent weeks, but its first overseas investment will also mean it has a particularly busy year ahead, with new casinos yet to be established in Hamilton and Queenstown.

Managing director Evan Davies yesterday rejected suggestions the move might not benefit Sky City shareholders, with Auckland already the best-performing casino in Australasia.

He stressed the company believed it could boost Adelaide's performance once the casino was refurbished, and it improved its links with the community and with tourist-based events.

Mr Davies said its main aim was to boost revenue, rather than cutting costs.

"The residents of Adelaide have historically been very proud of the casino. Over the last few years I think it has disappointed them a little bit in that it hasn't taken quite that leadership role it has in the past."

Meanwhile, Mr Davies also confirmed Sky City would probably seek an internet casino licence in Australia later this year or early next year, although it had decide yet to which state to target.

The Christchurch Casino has also been eyeing online opportunities in Australia, following warnings from the Department of Internal Affairs that it believes internet gambling is illegal in this country.

At present, there is only one legal cybercasino operating in Australia, based in the Northern Territory. There have also been suggestions Sky City might be interested if South Australia's TAB is put on the block, but Mr Davies said it was unlikely.

"I wouldn't say no, but it's not high on our priority list."