New Zealand’s SkyCity Entertainment Group has been granted leave to appeal a recent decision by the South Australian Court of Appeal on how loyalty points converted to gaming machine play are treated for the purpose of calculating casino duty.
A day after the company said it was suspending the payment of dividends through 2024 and 2025 due to challenging market conditions and looking expenses, SkyCity said it would now seek declaratory relief from the South Australian Supreme Court as to the proper construction of the state’s Casino Duty Agreement.
The High Court is now scheduled to conduct a full hearing of the appeal from the decision of the Court of Appeal later this year.
“The outcome of that decision could be that the High Court confirms the interpretation of the Agreement adopted by the Court of Appeal, or determines a different interpretation, such as that put by SkyCity Adelaide before the Court of Appeal,” the company explained.
“The question of the applicable interest rate for outstanding duty, and whether the contractual interest provision in the Casino Duty Agreement is enforceable, remains to be determined by a single Judge of the Supreme Court at a later date.”
SkyCity said that, should its appeal prove unsuccessful, SkyCity Adelaide may be obliged to pay penalty interest on the additional casino duty, which could be up to around AU$22.8 million (US$15.2 million). If successful in its appeal but unsuccessful in its application to the Supreme Court regarding penalty interest, then penalty interest may still be applicable but would be reduced to an amount of up to around AU$2.4 million (US$1.6 million).
The South Australian Court of Appeal ruled in February that credits on gaming machines arising from the conversion of loyalty points must constitute gaming revenue and that loyalty points earned by customers for gaming machine play may not be deducted from gaming revenue.
It also ordered SkyCity to pay AU$13 million (US$8.7 million) in back-payment related to deductions for loyalty points made from January 2014 to January 2024.
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