SkyCity Entertainment Group Faces AU$13.1 million Duty Payment After High Court Ruling

SkyCity Entertainment Group Limited (SKC.NZX/SKC.ASX) has been ordered to pay a staggering AU$13.1 million in additional casino duty following a High Court ruling on October 16, 2024, regarding its obligations at SkyCity Adelaide, in Australia. 

The case centred on the interpretation of a Casino Duty Agreement established on October 27, 1999, which determines how loyalty points converted to gaming machine play should be treated for calculating casino duty. 

The High Court upheld the South Australian Court of Appeal’s ruling, affirming that these loyalty points must be included in gaming revenue for duty calculations.  

As a consequence of this interpretation, SkyCity Adelaide is now liable for an estimated AU$10.3 million in additional duties based on reports filed up to January 2024, in addition to AU$2.8 million from a previous, unappealed judgment. 

To address this, SkyCity had previously recognised a provision of AU$13.1 million (approximately NZ$14 million) in its financial statements as of June 30, 2024, to cover this potential liability. 

Court Rules in Favour of Treasurer 

Adding to the complexity, the High Court also ruled in favour of the South Australian Treasurer regarding the interest clause in the agreement. The specific amount of outstanding interest is yet to be determined by a Supreme Court judge, which could expose SkyCity to further penalty interest potentially totalling AU$25.3 million as of September 30, 2024. 

CEO Committed to Working with Authorities 

SkyCity has not made provisions for this penalty interest, citing uncertainties about potential outcomes and the lack of a current obligation. CEO Jason Walbridge commented on the prolonged nature of the dispute and its technicalities, expressing optimism for a resolution as the company engages with RevenueSA. 

“The complexities of this case highlight significant tax issues around casino duty calculations. We are committed to working together with the authorities to arrive at a satisfactory outcome,” Walbridge stated. 

The High Court’s judgement will soon be available to the public, following standard court procedures.   

This ruling comes amid scrutiny in the gaming sector, with other companies, including Australian Leisure and Hospitality Group, facing penalties for underage gambling practices in Victoria.