SkyCity’s Future: Navigating Legal iGaming and Economic Challenges
In the evolving landscape of New Zealand’s gaming sector, SkyCity CEO Jason Walbridge is setting sights on the anticipated launch of legal online gaming. However, he notes that clarity is needed from government officials and regulatory bodies before moving forward.
For the fiscal year ending June 30, 2025, SkyCity Entertainment Group announced a return to net profitability, even amidst a revenue decrease. The total revenue reported was NZ$825.2 million (approximately US$479.5 million), marking a 4.2% decline from the NZ$861 million recorded in the previous year. Walbridge attributed this drop to reduced consumer spending and a decline in VIP player churn in Adelaide, emphasizing the company’s struggle with a challenging economic recovery in New Zealand.
“Our financial performance reflects the obstacles faced over FY25,” said Walbridge. “The slower-than-anticipated economic rebound has resulted in decreased discretionary spending, coinciding with heightened investment initiatives."
This investment focus includes necessary upgrades to regulatory systems and preparations for the New Zealand International Convention Centre (NZICC), alongside the eagerly awaited launch of online casino gaming.
What Lies Ahead for iGaming in New Zealand?
July brought promising developments as New Zealand edged closer to legalizing online gaming with the introduction of the Online Casino Gambling Bill. This legislative action signifies the government’s intent to regulate an unregulated market, setting the stage for 15 three-year licenses available to prospective operators.
SkyCity, along with other interested parties such as TAB NZ, 888, and Bet365, is keen on entering this newly regulated space. Nevertheless, Walbridge expressed caution regarding the timeline and specifics, noting that they await further governmental direction.
"We’re looking for comprehensive details on the licensing process and auction parameters," he stated. "We know the licenses will span three years with an option for five-year renewals."
Revenue Trends and Challenges
A deeper dive into SkyCity’s performance reveals a revenue slide across nearly all segments. Auckland reported an 11.6% downturn, generating NZ$209.6 million. Meanwhile, Hamilton and Queensland also saw declines, as did Adelaide with a substantial 21.5% drop.
Despite a 4.6% increase in total visitation, with 10.5 million guests across their properties, the online segment faced significant challenges. SkyCity’s online revenue plummeted from NZ$3.6 million in FY24 to a NZ$1.8 million loss, a situation attributed to competitive pressures and ongoing investment ahead of the regulatory changes.
Positive Signals Amidst Economic Pressure
On a brighter note, operational costs decreased year-on-year, allowing the company to regulate its finances better. With no expenses tied to the NZICC fire incident from 2019, operating profit reached NZ$121.9 million, a staggering 164.4% increase. Additionally, pre-tax profit improved to NZ$68.2 million despite rising finance costs.
Following tax legislation changes, SkyCity reported a lower income tax bill of NZ$38.9 million, contrasting sharply with the NZ$173.5 million recorded in the previous fiscal year. Hence, SkyCity concluded FY25 with a net profit of NZ$29.2 million, a stark recovery from the NZ$143.3 million loss experienced in FY24.
A Cautious Outlook for FY26
As the company prepares for its next financial year, Walbridge flagged multiple factors that might impact performance, including the introduction of mandatory player identification—an initiative that seeks to enhance responsible gaming measures.
“Carded play is now implemented across all New Zealand locations,” he noted. “Although it’s early, feedback from customers has been promising. We estimate this change will affect uncarded revenue significantly.”
With various challenges lingering, SkyCity forecasts its EBITDA for FY26 to range between NZ$190 million and NZ$210 million, a decline from FY25 earnings. Increased interest expenses, depreciation, and tax obligations will likely see no dividends paid out in FY26.
Is There Hope for FY27?
Looking towards FY27, Walbridge remains optimistic about the potential lift from the regulated online gaming sector.
"We believe earnings will recover in FY27, anticipating the NZICC to break even and online gaming to yield similar results in its inaugural year," he asserted. "We expect an overall boost in spending per visit as New Zealand’s economy stabilizes and the NZICC enhances our visitor experience.”
SkyCity stands poised to harness the opportunities that upcoming legislative changes and economic recovery may bring, as it navigates through this pivotal phase in the gaming industry.