SkyCity Entertainment Group has successfully reached a resolution with the South Australian government, bringing an end to a prolonged and complicated legal and tax dispute. The dispute, which revolved around the treatment of gaming loyalty points at the company’s Adelaide casino, has now been settled with a payment of AU$38.1 million (approximately NZ$42 million). This settlement marks the conclusion of legal proceedings that had been ongoing for years.

SkyCity’s long legal battle over tax rules concludes:

The issue at the heart of the dispute involved the calculation of casino duty in relation to loyalty points that were converted into gaming machine credits at SkyCity Adelaide. These points, awarded to players as part of the casino’s rewards program, had been a source of contention over how they should be treated for tax purposes. The legal battle between SkyCity and the South Australian government ultimately focused on the interpretation of tax rules and the terms of the agreement between the two parties.

The settlement, which was officially accepted by SkyCity Adelaide on February 3, 2025, requires the company to pay a total of AU$38.1 million. This includes AU$13.1 million in additional casino duty, AU$24.8 million in interest, and AU$200,000 in legal costs owed to the South Australian Treasurer. This amount covers casino duty periods spanning from January 2014 to January 2024.

The tax dispute has been a significant issue for SkyCity, with complex technical matters regarding how casino duty should be calculated on loyalty points. SkyCity’s Chief Executive Officer, Jason Walbridge, commented on the resolution, noting the complexity of the tax issues involved. “This has been a long running matter involving highly technical tax issues regarding the calculation of casino duty and the interpretation of the Agreement,” Walbridge said in the NZX’s press release. He expressed satisfaction at the resolution, emphasizing the company’s desire to maintain a positive and collaborative relationship with the state’s revenue authorities. “SkyCity is pleased the matter has been resolved and will continue to work with RevenueSA to ensure a cooperative and constructive relationship.”

The final settlement is expected to be formalized in a written agreement between SkyCity and the South Australian government in the near future. This agreement is the culmination of extensive negotiations that followed a ruling from the High Court of Australia in October 2024. In that ruling, the court dismissed SkyCity’s appeal regarding the interpretation of the tax rules, prompting the company to reach a settlement to close the matter.

Financial and regulatory setbacks for SkyCity:

The settlement represents a significant financial obligation for SkyCity, which has already made provisions for part of the amount in its financial reports. According to RNZ, in its 2024 financial accounts, SkyCity had allocated AU$10.3 million (NZ$11.3 million) in anticipation of the final settlement. However, the settlement amount is substantial, and its impact will not be reflected in the company’s half-year earnings report set to be released in February 2025.

This settlement is only the latest in a series of financial and regulatory challenges facing SkyCity. Last year, the company faced a major impairment of AU$86.2 million (US$57.5 million) related to its Adelaide casino assets, which was linked to the upcoming introduction of mandatory carded play at the casino in 2026. Additionally, SkyCity has had to contend with rising legal and compliance costs, especially in relation to the implementation of various programs to uplift its casino operations.

The company has also faced scrutiny from regulatory authorities in both New Zealand and Australia. In 2024, SkyCity reached a separate agreement with Australian anti-money laundering watchdog AUSTRAC, agreeing to pay AU$67 million (US$45 million) to settle historical compliance failures at its Adelaide casino. Moreover, the company agreed to a NZ$4.16 million (US$2.54 million) civil penalty in New Zealand for breaches of the country’s Anti-Money Laundering and Countering Financing of Terrorism Act.

While the tax dispute with South Australia has now been resolved, SkyCity continues to face broader challenges, including inquiries into the company’s fitness to hold a casino license in South Australia. These investigations add to the regulatory pressures the company has already been dealing with, as it works to modernize its operations, improve its compliance systems, and address financial strains caused by economic factors affecting the gaming industry.

Despite these challenges, SkyCity remains committed to fostering good relations with regulators and ensuring that its operations are fully compliant with all necessary standards. “We will continue to work with the relevant authorities to ensure we are meeting all regulatory requirements and contributing positively to the community,” said Walbridge.

The company’s leadership will also continue to focus on revitalizing its core business, including ensuring that its systems and operations are up to date, particularly in light of the changing landscape of gaming regulation. In the meantime, SkyCity will preserve its financial resources, including suspending dividends, as it looks to navigate through these difficult times while preparing for the future.