SkyCity Entertainment Group is poised to tap into the lucrative online gaming space with plans to launch a platform mid-year that will be operated from Malta.
The casino operator said its Maltese subsidiary company, SkyCity Malta, will partner with Gaming Innovation Group, an international iGaming company, to launch the "skycitycasino" online gaming site.
As part of the agreement, GiG will provide a full-suite online casino solution which includes a technical platform, gaming content, managed services and front-end development. The arrangements will be structured primarily as a revenue share arrangement, with the majority of operating costs variable or directly linked to revenue generation, SkyCity said.
Chief executive Graeme Stephens said the firm's entry into online gaming will be "conservative."
As a result, SkyCity "is not initially expecting to monetise materially from this initiative – it should be seen more as a strategic entry into a space that we believe has long-term relevance," he said.
Under current New Zealand law, only government-owned Lotto and the TAB are permitted to offer online gaming from within New Zealand. However, many New Zealanders freely participate in online casinos provided by offshore operators.
"Online casinos are widely used by New Zealand customers and this trend will only continue. The world is rapidly moving online and our industry is no exception, so we have to ensure we remain relevant to changing consumer trends and preferences,'' said Stephens.
According to SkyCity, estimates suggest New Zealanders spend approximately $160 million a year on online casino platforms currently provided by offshore operators. The offshore companies offering these games are not liable to pay local gaming tax, are unlikely to be paying GST in New Zealand and are not required to comply with the host responsibility practices of land-based operators, it said.
SkyCity plans to be different.
Although the online casino will be operated from offshore, it will comply with its obligations under New Zealand GST legislation, it said. Stephens also said SkyCity would be supportive of any future plans by the government to regulate the New Zealand online casino market, including introducing an appropriate licensing regime for operators and imposing taxes and mandatory host responsibility requirements.
"We believe the skycitycasino online gaming site offers customers an opportunity to enjoy playing in a safe, secure environment with a brand they know and trust," he said. "We will be striving to set the benchmark for any regulation in the future."
Should SkyCity ultimately become a licensed operator in a regulated New Zealand online casino market, the agreement with GiG allows for SkyCity to assume the business-to-consumer components of the business in the same way as it does for its current land-based activities.
The company's shares last traded at $3.82 and are up 7.6 per cent so far this year.