SkyCity Warns of Potential Financial Shortfall in FY25 Due to Deteriorating Market Conditions
Casino Troubles Ahead for SkyCity
It seems SkyCity Entertainment Group is bracing itself for a turbulent year, as they've recently announced that their 2025 full-year EBITDA is likely to fall short of their revised guidance, mainly due to a persistently grim market landscape.
In a candid trading update, SkyCity revealed that their EBITDA might drop about 4% below the lower end of their guidance range, which stands between NZ$225 million (US$124 million) and $245 million. This prediction comes following a string of declines in key areas during the first half of their financial year.
In a bid to clarify the situation, let's delve a bit deeper.
The Root Cause: Disappearing Dough
The group has been grappling with a reduction in spend per visit across various properties. This drop is particularly apparent in Auckland, where both gaming and hospitality expenditure have dipped. On the other hand, casinos in Hamilton and Queenstown have generally met expectations, offering a glimmer of hope.
In Adelaide, the picture is a mixed bag. While the uptick in anti-money laundering measures and a reinforced gambling harm minimization program have dampened VIP patron visitation and spending, electronic gaming machine turnover has managed to grow year-over-year. SkyCity plans to invest a substantial $60 million between FY25 and FY27 in this initiative.
A Rugged Road Ahead
In the update, CEO Jason Walbridge acknowledged the persistent challenging market conditions, which are taking a toll on discretionary consumer spending. Despite the pleasing overall visitation numbers, these adverse circumstances are impacting SkyCity's revenue and earnings significantly. Walbridge, however, remains optimistic about the future, citing the scheduled opening of the New Zealand International Convention Centre (NZICC) in February 2026 as a positive development.
A Digital Future for SkyCity?
An intriguing angle to consider is SkyCity's plans for online gambling. Although not explicitly mentioned by Walbridge in the update, it's worth noting that SkyCity is preparing for the launch of a regulated online casino in New Zealand, scheduled for 2026. The company is collaborating with the government as regulations for the market are being drafted.
According to cabinet papers filed in September 2024, SkyCity is among the few grey market operators expressing interest in applying for an iGaming license. Other interested parties include Tab NZ, Grand Casino Dunedin, Christchurch Casino, Class 4 societies, 888, Bet365, SpinBet, Spin City, and Super Group (including Betway).
Stay tuned for more updates as the story unfolds!
In the midst of challenging market conditions, SkyCity Entertainment Group is forced to adjust its financial expectations, with the 2025 full-year EBITDA projected to fall below the lower end of the guidance range due to a decrease in spend per visit across their properties, particularly in Auckland. This predicament could potentially reshape the future of their business, prompting them to explore new avenues within the industry, such as online gambling.
