Sat, Aug 17, 10:07am by Kevin Pitstock
SkyCity Entertainment Group announced a normalised net profit after taxes of $132,300,000 today. While the company’s CEO labelled the profits an acceptable result on balance, the profits are down 8% from last year, which worries some investors.
SkyCity Entertainment’s chief executive Nigel Morrison says the dip in profits is nothing to be alarmed about. The loss in relative revenue from the previous year is being affected by high rollers who are refusing to pay their bills. Apparently, a group of 20 high stakes players from overseas played at SkyCity, lost $2.7 million on baccarat and refused to pay their debts.
In the case of these high rollers, it wasn’t a case of problem gamblers who received a line of credit then spent well above their means. Instead it appears that the casino fell victim to an orchestrated plot to get a line of credit then make bets in hopes of scamming big money out of the casino. When the house edge worked against the high dollars players, and it was time to pay off their credit line, they refused to make payments and left the establishment.
SkyCity considers the $2.7 million bad debt and has written it off as such. Representatives for the gaming company say the people may have a history of using the same tactics at overseas casinos, too. SkyCity calls the situation a “fact of life” for casinos, but they are in the process of trying to collect some of the money. Though this particular crime has never happened to this management group before, it is a known tactic in casino gambling.
SkyCity CFO James Burrell said the group came into the casino in the first half of the financial year, so this transpired some time ago. Burrell stated, “Whilst we are still working hard to recover those debts, thus far we haven’t been successful”.
Nigel Morrison added that their executives do not consider their former overseas visitors’ tactics to be “legitimate gaming activity.” Instead, he claims this act is both orchestrated and unprecedented (for SkyCity). Mr Morrison said, “I think it’s probably fair to say we would regard this as a bit of a scam.”
Mr Morrison went on to say his management group had minimized the impact of this gaming scan on the bottom line, citing the credit which has been advanced and collected, as well as the turnover and volume SkyCity since has had.
SkyCity’s executive officers cited other contributing factors in the revenue decline, as well. One factor was the strengthening of the New Zealand dollar compared to the Australian dollar. Another important factor which ballooned revenues last year was the one-off impact of gambling on the Rugby World Cup.
The last factor certainly would seem to have an impact on the yearly results. Despite the 8% decline in net profits from the last financial year, SkyCity Entertainment Group’s leaders appear to be optimistic about their businesses’ future.
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