SkyCity Entertainment Group subsidiary SkyCity Casino Management Limited has reached an agreement with the Secretary for Internal Affairs regarding the government body’s application to temporarily suspend the firm’s casino operator’s licence.
As a result, SkyCity Auckland’s gambling area will be closed for five consecutive days in 2024, with the agreement conditional “on the Gambling Commission consenting to the withdrawal of the application by the secretary”, which has been filed.
The operator has also forecasted an impact of approximately NZ$5m on its underlying group EBITDA in FY25 following the temporary closure.
The application to temporarily suspend SkyCity Auckland’s licence for a period in the range of 10 days was initially made by the secretary in September 2023. It followed a complaint to the Department of Internal Affairs in February 2022 by a former SkyCity Auckland casino customer who gambled between August 2017 and February 2021.
The secretary alleged that SCML failed to comply with SkyCity Auckland Host Responsibility Programme requirements about the detection of incidents of continuous play by the customer.
Through the agreement with the secretary, SCML has acknowledged that it didn’t meet SkyCity Auckland HRP requirements and the detection of some incidents of continuous play by the customer “due to a design error in a technology system” developed by the operator to monitor carded customers’ continuous play.
The operator noted that this has since been rectified.
“SkyCity places great importance on host responsibility and takes these failures very seriously. On behalf of the SkyCity board and management team, I accept and apologise for these failures.”
Callum Mallet, Chief Operating Officer New Zealand at SkyCity
In addition, SCML accepted that it “failed to exercise the level of vigilance required by the HRP to use staff observation and intervention independently” as well as technology to spot continuous play incidents by the customer and act appropriately – especially in cases where problematic behaviour is silent or hidden.
A formal apology has also been issued by SCML to the secretary for the failures and SkyCity Auckland’s gambling area will be closed for five consecutive days in 2024 on dates agreed to by both parties “to resolve the matter in an expedient manner and without undue delay”.
Callum Mallet, Chief Operating Officer New Zealand at SkyCity, commented: “SkyCity places great importance on host responsibility and takes these failures very seriously. On behalf of the SkyCity board and management team, I accept and apologise for these failures.”
SkyCity’s Chair, Julian Cook, noted: “Reaching this agreement to close the SkyCity Auckland gambling area for five days resolves this matter. However, there is still considerable work required and underway to improve our risk systems, including our approach to mitigating financial crime and problem gambling.
“It is clear that historically SkyCity’s focus, resources and investment have fallen short of what was required of the business. This is not acceptable and, as part of meeting our regulatory obligations and wider social licence, we are committed to fully addressing this.”
“There is still considerable work required and underway to improve our risk systems, including our approach to mitigating financial crime and problem gambling.”
Julian Cook, Chair at SkyCity
As part of a multi-year transformation programme established in 2021 to strengthen risk management across the SkyCity Group, the company has undertaken several actions.
Measures include refreshing its board with specialist risk expertise directors; a Board Risk and Compliance Committee to oversee AML/CFT, host responsibility, risk and other compliance obligations; a Board of Transformation Sub-Committee to take charge of the transformation programme; and adopting three lines of accountability control framework.
A Group Chief Risk Officer was also appointed; enhancement and investment in further AML/CFT resourcing and capability, processes and systems; higher standards of due diligence on customers, lowering cash thresholds for enhanced customer due diligence and ceasing junket operators deals; and increase financial crime, risk and compliance and host responsibility teams capacities.
SkyCity has also reduced risk and complexity with a lower risk tolerance to limit ways customers can transact; enhanced facial recognition technology in Auckland and Hamilton to monitor continuous play; increased ATM monitoring in Auckland and Hamilton for withdrawals and declined transactions; increased customer interactions to assess for problem gambling signs; and rolled out an Advanced Host Responsibility staff training programme for frontline staff.
“It is encouraging to see the work SkyCity has already done to lift its performance in this area and its public commitment to continue to improve.”
Department of Internal Affairs
Lastly, the operator has committed to mandatory carded play across New Zealand casinos by mid-2025, and at its Adelaide casino by the end of next year.
The Department of Internal Affairs added: “The Department acknowledges the swift action taken by SkyCity to improve their system for detecting indicators of potential problem gambling after being alerted to the issue relevant to this case, and appreciates their proactive and pragmatic approach to resolving the complaint.
“It is encouraging to see the work SkyCity has already done to lift its performance in this area and its public commitment to continue to improve.”
Reflecting on the SkyCity Auckland five-day closure, the group noted that the impact on underlying group EBITDA in FY25 is expected to be around NZ$5m. As a result, underlying group EBITDA for FY25 is now expected to fall between $245m and $265m.
This figure was previously between $250m and $270m, which did not include any potential temporary licence suspension impact, but it did incorporate the temporary closure of the Auckland casino’s gambling area.
