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Sky City concerned by Chinese crackdown

Fri, Oct 21, 11:34am by Staff Writer

Casino operator Sky City has signaled it could also face a financial hit from the fallout of the detention of 18 Crown Resorts employees in China.

Although Sky City said the contractors it uses there haven’t been questioned in what authorities say is an investigation into gambling-related crimes, the worry is certainly there.

SkyCity, which runs casinos in Adelaide and Darwin, said it is ‘closely monitoring recent events concerning Crown employees’ being detained in China, where casino firms such as Australia’s Crown have looked to wealthy gamblers to help fuel growth.

With their head office in New Zealand, Sky City doesn’t have an office in China or China-based employees, but said it does use independent contractors in China ‘who help manage customer relationships from time-to-time’.

SkyCity runs six casinos across Australia and New Zealand, as well as hotels, restaurants and bars said none of its contractors have been questioned or detained as part of the investigation, and it is ‘confident’ they comply with Chinese laws.

SkyCity made an after tax profit of NZ$145.7 million for the year to June 30 as VIP high-rollers gambled at record levels.

However, since then SkyCity’s international business revenue fell 20 per cent, which reflected fewer trips from its larger VIP customers.

“I would highlight that activity in our international business can be quite volatile from period-to-period reflecting a smaller number of large customers which can influence the business based on the timing of their trips,” Sky chief executive John Mortensen said.

SkyCity’s international business accounts for about 15 per cent of its revenue and half of those customers were from China.

“Accordingly, we consider ourselves to be a relatively small player relative to our peers, and to have less exposure to economic conditions or changes in policy in China and broader Asia which may impact our international business,” Mortensen said.

“We expect international business turnover to weaken further following recent events in China.”

China last year announced a crackdown on gambling-related activities, including groups that organise trips to casinos overseas. Gambling is illegal in China and foreign companies aren’t allowed to directly advertise their casinos there.

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