The news: SkyCity Entertainment will pay an additional casino duty of $13.1 million, after the South Australian High Court rejected an appeal by the casino operator regarding the treatment of loyalty points in its financial statement.
The numbers: SkyCity shares were down 1.5% to $1.30 by 11:50pm AEDT, having dropped nearly 25% since January.
As at 30 June, SkyCity had recognised a $13.1 million provision in relation to the potential exposure to the additional casino duty.
The context: The new ruling by the High Court follows an appeal by SkyCity Adelaide of the Court of Appeal’s judgement on the interpretation of provisions in the Casino Duty Agreement between SkyCity Adelaide and the Treasurer of South Australia.
The agreement relates to the treatment of loyalty points converted to gaming machine play for the purpose of calculating casino duty at the SkyCity Adelaide casino.
SkyCity said the matter has been the subject of a longstanding contractual dispute concerning the interpretation of the agreement.
The High Court has now confirmed the Court of Appeal’s interpretation of the agreement, finding that credits on gaming machines arising from the conversion of loyalty points, when played by customers, are to be included in gaming revenue for the purpose of calculating casino duty at the SkyCity Adelaide casino.
The High Court has also ruled in favour of the Treasurer of South Australia in a cross appeal, regarding the interest clause in the agreement. However, the amount of interest payable on outstanding duty remains to be determined by a judge of the Supreme Court of South Australia “at a later date”.
SkyCity said that if the Supreme Court’s decision is unfavourable to SkyCity Adelaide, the casino may face a penalty interest on the additional casino duty, which could be “up to around $25.3 million”.
SkyCity said it has not recognised a provision in relation to the penalty interest as there remains a “range of potential outcomes and no present obligation exists”.
What they said: “This is a long running matter involving highly technical tax issues regarding the calculation of casino duty,” SkyCity CEO Jason Walbridge said.
“Given the complexities, both parties decided to seek declaratory relief through the court.
“We look forward to the resolution of this matter and will continue to work with RevenueSA to achieve this.”
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