SkyCity’s License at Risk amid Scrutiny and Regulatory Investigation

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SkyCity Entertainment, a prominent casino operator in New Zealand, has been hit with a setback as the Department of Internal Affairs (DIA) applied for the temporary suspension of the license of its SkyCity Casino Management (SCML) unit.

The announcement had an immediate impact on the company's shares, causing an 18.5% drop.

The Bid That Sparked Suspension

The DIA's application, made to the country's gambling commission, seeks to suspend SCML's casino operator's license for a period of "10 days". The move follows a complaint filed early last year by a former customer who engaged in gambling activities at the SkyCity Auckland casino from August 2017 until February 2021.

SkyCity stated that the application was lodged due to alleged non-compliance by SCML with the requirements outlined in its SkyCity Auckland Host Responsibility Programme. It is designed to ensure the detection of instances of continuous play by customers and mitigate the potential of problem gambling and harm caused by prolonged activity.

In response to the application, shares of SkyCity experienced a sharp decline of as much as NZ$1.900 by 0209 GMT, marking the lowest point since April 8, 2020. The negative market sentiment reflects concerns about the potential impact of the license suspension on the company's operations and financial performance.

Related: SkyCity Casino is Being Sued by AUSTRAC.

"The Secretary of the DIA states in the application that SCML did not comply with requirements in its SkyCity Auckland Host Responsibility Programme relating to detection of incidences of continuous play by the customer," explained SkyCity in an official statement. SCML holds the license for SkyCity's casinos situated in Auckland, Hamilton, and Queenstown regions in New Zealand.

Scrutiny Amidst Harm-Minimization Investigation

While SkyCity chose not to elaborate further on the situation, the company assured its commitment to full compliance with the DIA secretary's directives regarding the application and its subsequent process. The regulatory scrutiny comes because of an investigation into SkyCity's gambling harm-minimization practices conducted by the DIA.

According to Reuters John Sneyd, the general manager of regulatory services at the DIA, the investigation led the secretary to conclude that SkyCity had breached critical harm-minimization obligations, including conditions specified in its license and the Host Responsibility Programme.

This development comes on the heels of regulatory actions in Australia targeting the gambling industry. Last year, the Australian financial crime regulator initiated civil proceedings against SkyCity's casino in Adelaide as part of a broader effort to enforce tighter controls on gambling operations.

As the casino operator navigates the regulatory challenges posed by the license suspension application, industry observers are closely watching for any potential impact on SkyCity's operations, financials, and reputation. The outcome of this situation may have broader implications for the gambling industry's approach to harm-minimization practices and customer welfare across the region.

Related: The Potential of New Zealand’s Online Gambling Market.

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