SkyCity Entertainment Group has been ordered to pay an additional $13.1 million in casino duty to the South Australian government following a ruling from the country’s High Court. This decision comes after a long-standing dispute regarding the treatment of customer loyalty points used for gaming machines at SkyCity Adelaide.
The High Court’s judgment brings an end to the casino operator’s appeal, confirming that the loyalty points, once converted into gaming machine credits, should be included in the calculation of taxable gaming revenue. The South Australian High Court ruling also leaves SkyCity Adelaide facing potential additional penalties of up to $25.3 million in interest, contingent on a forthcoming judgment from a single judge of the Supreme Court of South Australia, according to Capital Brief.
Background of the Dispute
The case revolves around the interpretation of the Casino Duty Agreement between SkyCity Adelaide and the South Australian Treasurer, which governs how gaming revenue is calculated for tax purposes. The key issue was whether customer loyalty points, once converted into gaming machine credits and played by patrons, should be factored into the casino’s gaming revenue, and thus be subject to casino duty.
SkyCity had argued against this interpretation but lost its appeal. The High Court has now affirmed that these loyalty points do indeed constitute gaming revenue when used by customers, making them taxable under the existing agreement. This conclusion aligns with a previous ruling from the Court of Appeal, which was also found to be in favor of the South Australian government on the same issue.
SkyCity’s Response to the Ruling
In response to the ruling, SkyCity Entertainment CEO Jason Walbridge described the issue as highly technical and complex, emphasizing that both SkyCity and the South Australian government had sought clarity from the courts. “This is a long-running matter involving highly technical tax issues regarding the calculation of casino duty”. He also stressed that SkyCity is committed to resolving the situation and working with the South Australian tax authorities to comply with the court’s decision.
Despite the financial implications of the ruling, SkyCity has already made a $13.1 million provision for the extra duty in its financial statements for the fiscal year 2024. The company remains cautious about the final amount of interest it may owe, awaiting the next phase of legal proceedings in the Supreme Court.
Ongoing Challenges for SkyCity Adelaide
While the High Court ruling concludes one significant legal issue, SkyCity Adelaide still faces additional challenges. The South Australian government is conducting a separate investigation to determine whether SkyCity is fit to retain its casino license in the state. This ongoing investigation could lead to further fines or operational restrictions depending on its outcome.
Andy Bowley, Head of Research at Forsyth Barr, cited by RNZ, pointed out that SkyCity’s issues in Adelaide are not yet fully resolved. “SkyCity could be facing a steep fine and operating restrictions depending on the outcome of the state government’s ongoing investigation,” Bowley commented. He also noted that although the company could face one-time financial penalties, its underlying business performance would continue to be shaped by broader market factors such as consumer trends and tourism.
