SkyCity Entertainment Group Warns of EBITDA Downturn in 2024

SkyCity Entertainment Group Warns of EBITDA Downturn in 2024 | The Enterprise World

SkyCity Casino Entertainment, a company known for its contributions to online gambling in New Zealand, has announced a potential decrease in adjusted EBITDA for FY24. Initially, SkyCity reported a total of NZ$310 from the 2023 fiscal year and predicted this amount would rise in 2024. However, it reversed this prediction after several factors fell into place. 

Based on its findings, the decrease stemmed from reduced revenue from electronic gaming machines and a delayed settlement of its car park concession agreement. We’ve discussed these elements and how they affect online gambling locations in New Zealand. 

SkyCity Entertainment Group Overview

SkyCity Entertainment Group Warns of EBITDA Downturn in 2024 | The Enterprise World

The entertainment group started operations in 1996 and is known for its gambling services in New Zealand. A great example is SkyCity’s Casino, an online establishment with a decent game library, multiple payment methods, and fast withdrawals. Its physical holdings include five casinos in NZ and Australia. All provide reliable services according to the regulations in their jurisdictions. 

Check out the table below for an overview of the reputable company:

IndustryGambling & hospitality
HeadquartersAuckland, New Zealand
ProductCasinos and Hotels
PropertiesSkyCity Adelaide, SkyCity Auckland, SkyCity Hamilton, SkyCity Queenstown and SkyCity Wharf Casino

Here’s a brief breakdown of what its physical locations offer:

  • Adelaide: This venue opened in 2000. It has a gambling license from the South Australian Government. For entertainment, it boasts 90 tables and 990 gaming machines.
  • Auckland: Opened in 1996, it’s the company’s largest casino, with 110 tables and 1,647 gaming machines.
  • Hamilton: It launched in 2002 and offers 23 tables and 339 gaming machines
  • Queenstown and Wharf: Both opened in 2000, the Queenstown establishment, featuring 86 machines and 12 tables. The casinos at the Steamer Wharf complex have 74 machines and 6 tables.

Announcement Details

In December 2023, SkyCity Group announced a revision to its EBITDA for FY24 and noted the amount to range between NZ$290 and NZ$310. This is comparable to the normalised EBITDA for FY23, which was NZ$310 million. The adjustment was made based on the company’s performance within the first five months of the fiscal year. Though the group had anticipated an increase, it pointed out that the projected reduction was due to certain factors discussed below.

Factors Contributing to Potential Earnings Decline

SkyCity Entertainment Group Warns of EBITDA Downturn in 2024 | The Enterprise World

SkyCity’s revenue from electronic gaming machines across its New Zealand locations reduced. This is one of the major contributors to its financial changes.  According to the company, the reduction is due to the increased cost of living and economic uncertainty. Both have led some customers to spend less on gambling activities than they regularly did. 

Another hitting factor is the underperformance of the company’s Adelaide property in Australia.  The establishment has generated a lower revenue than predicted due to compliance and legal costs. This has led SkyCity to reassess the location’s cost base in order to determine the best course of action. 

Besides the two factors outlined earlier, there’s a delay in SkyCity’s Auckland car park concession.  In 2019, it signed an agreement with MPF Parking. The latter pulled out in October 2023 after SkyCity failed to deliver underground car parks on time. 

Possible Suspension of Online Gambling in New Zealand

SkyCity Entertainment Group Warns of EBITDA Downturn in 2024 | The Enterprise World

All changes in projections for FY24 don’t prevent the company from making money. In fact, SkyCity still looks forward to a return of $125 million to $135 million after tax deduction. However, the company is concerned about possibly suspending its operations in New Zealand. 

The situation from the country’s secretary of the Department of Internal Affairs. This office applied for a 10-day suspension of SkyCity Casino Management’s license. The application is based on a SkyCity Auckland customer’s complaint in February 2022.

SkyCity will fully comply with the secretary for the application process. However, no final decision has been made, as the settlement can take months to complete. 

Despite these setbacks, the entertainment group is optimistic about its growth. That’s because there are talks of online gambling regulations in New Zealand. While legislation discussions are in the early stages, the operator is preparing for changes. 

Final Thoughts

Since it began operations, SkyCity has built a strong reputation in New Zealand and Australian gambling markets. Most of its land-based locations are thriving, offering a decent number of machines to entertain players. Its online casino stands as a leading gaming platform. This site operates with a Malta Gaming Authority license and offers 1,500 games, among others.

Based on its previous performances, the company had anticipated its EBITD a steady growth in EBITDA. However, FY24’s amount is expected to be synonymous with FY23 due to the factors we discussed in this text. These include a smaller revenue from electronic gaming machines in its physical locations. Regardless, the year holds much promise. That’s because the company is already preparing for possible NZ gambling regulations. 

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