SKYCITY considers sale of Darwin Casino

Located in Darwin City in Australia’s Northern Territory, the complex includes a five-star hotel, a casino with multiple gaming tables and gaming machines, and different other entertainment and accommodation options. SKYCITY purchased the property from US-based gambling operator MGM Resorts International back in 2014 for A$195 million.

The resort’s new owner saw a drastic decline of proceeds from casino operations in the years after the purchase. As reported by local media, SKYCITY attributed the underperformance of its Darwin gaming floor to the increased number of poker machines across pubs and clubs located around the resort.

It has been estimated that the number of gambling machines has increased 75% in the Northern Territory since 2015. Easy access to those has been said to have cannibalized revenue from local casinos.

During a meeting with shareholders, SKYCITY’s Chief Executive Graeme Stephens has revealed that the Darwin casino had a tough previous financial year and the growing number of poker machines in the Northern Territory was one of the main reasons for that. Mr. Stephens was appointed as the gambling operator’s CEO last November and assumed his role in May.

The New Zealand-headquartered company’s top official has pointed out that SKYCITY Darwin features excellent facilities and owns undeveloped plots of land that could further bolster its offering.

However, the operator would be seeking a business partner for any further development and, according to various media reports, may even decide to sell the casino portion of the complex, if the move is what will help the struggling gambling business. SKYCITY has announced that it is carrying out a review of the best possible options for creating shareholder value and that any further actions will be based on that review.

Here it is interesting to note that news about SKYCITY’s potential sale of the ailing casino have emerged shortly after the August publication of the operator’s results for the 2017 financial year. Back then, the hotel and casino manager said that it had ruled out sale of its gaming assets in Darwin despite the tough competitive environment, and that it considered the possession of gaming license particularly valuable.

Apart from its Darwin property, SKYCITY also manages properties in Adelaide in South Victoria, as well as in Auckland, Hamilton, and Queenstown in New Zealand. In Auckland, the operator is currently participating in the development of the New Zealand International Convention Centre, a multi-million dollar, multi-purpose complex expected to open doors in mid-2019. It will feature meeting and conference facilities, a 300-room, five-star hotel, and a number of other venues, including an already operational casino managed by SKYCITY.