Profits fall at troubled SkyCity Adelaide casino

A “challenging operating environment” has been blamed for a dip in earnings at SkyCity’s Adelaide casino in the first half, with the company’s CEO set to leave in March.

Feb 22, 2024, updated Feb 22, 2024
SkyCity Adelaide. Photo: supplied

SkyCity Adelaide. Photo: supplied

Underlying earnings at SkyCity Adelaide came in at $16.9 million in the first half of the financial year, 10 per cent lower than the same period a year ago.

The company blamed a “challenging operating environment” for the decline, with both revenues and profitability down over the six months.

Auckland-based parent company SkyCity said that while Adelaide gaming revenues were down, non-gaming revenues increased over the period.

“The Adelaide business has implemented changes in its cost base to reflect the more challenging operating environment,” said SkyCity.

The results come as CEO Michael Ahearne announced he would step down from the company on 8 March, as flagged last year.

Chief operating officer Callum Mallett will take over on an interim basis while the company searches for a permanent replacement.

Overall, SkyCity underlying group revenue was up 0.6 per cent to $490.2 million in the six months to 31 December, while earnings were down by nearly 10 per cent to $146.3 million.

The company’s underlying net profit after tax was also down 8.5 per cent to $66.5 million, and outgoing CEO Ahearne said “the challenging economic climate impacted our business this half”.

The results come as SkyCity is bracing for a potential $73 million regulatory hit in Adelaide.

Announced earlier this month, the company put an extra $28 million aside to cover what it anticipates to be a “material civil penalty” from the outcome of an AUSTRAC-instigated money-laundering court case.

SkyCity also said in February it came to an agreement with AUSTRAC to admit in court to “serious breaches” of the Anti-Money Laundering and Counter-Terrorism Financing Act.

The financial crimes watchdog’s claim included allegations the casino failed to conduct ongoing customer due diligence on 59 people, that it made $74 million from “high-risk” customers who had reported links to organised crime, and that some gamblers at the North Terrace venue used “cash that appeared to have been buried”.

The casino also faces a South Australian government investigation into whether SkyCity is fit to hold its casino licence. That investigation was “put on hold” while the AUSTRAC proceedings are ongoing.

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