Institutional investment reaction is divided over SkyCity Entertainment Group's pokies-for-convention-centre proposal.

Graeme Thomas of Milford Asset Management in Auckland said the $350 million Auckland deal was leaving some shareholders unimpressed.

"There is little doubt that the possible outcomes of this process have caused investors to be wary," Thomas said.

But Nachi Moghe, senior equities analyst at Morningstar in Auckland, was more optimistic about thecentre and prospects for SkyCity's Adelaide casino, where a bigexpansion is planned.


Both deals could be significant drivers of earnings growth for the next several years and could materially increase shareholder value, Moghe said.

SkyCity, which released its June-year results last week, stood to gain substantially from the deal, particularly on its share price, he indicated.

"Our back-of-the-envelope calculation suggests a lift in valuation of between 35c and 70c a share [9 per cent to 17 per cent on our current $4 fair value], should the company be allowed an additional 350 to 400 gaming machines," Moghe said.

"Similarly in Adelaide, the company is in discussion with the South Australian Government [about] the A$250 million ($322 million) Adelaide Riverbank project."

SkyCity was aiming for similar returns there and if the project went ahead it would transform the casino from a relatively staid business into an attractive entertainment and gaming complex, Moghe said.

SkyCity was counting on high-spending Asian visitors to rejuvenate growth, he said.

The Problem Gambling Foundation said New Zealand had about 20,000 poker machines. They were the most common form of gambling, the most used by problem gamblers and disproportionately likely to be in poor areas.