SkyCity to pay big SA tax bill after losing legal gamble
Adelaide’s casino operator must hand over $13 million in unpaid taxes to the state government after it lost a High Court appeal, with the Treasurer criticising the company over a “frustrating, time-consuming and expensive process”.
The High Court today ruled on its interpretation of how South Australia’s casino pays taxes to the state government, with SkyCity to pay additional casino duty of approximately $13 million.
The casino could also now be forced to pay a further $25.3 million in interest on top of the unpaid taxes as a result of the High Court’s decision.
The case involved the interpretation of relevant provisions in the Adelaide Casino Duty Agreement 1999 – specifically how to determine the treatment of loyalty points converted to gaming machine play and the deduction of loyalty points earned for the purpose of calculating casino taxes.
The complex legal case was entered into by both parties as they sought clarification from the South Australian judiciary on how to interpret the relevant provisions.
In February the South Australian Court of Appeal ruled in favour of the Treasurer of South Australia’s interpretation of the Casino Duty Agreement and found that “credits on gaming machines arising from conversion of loyalty points, when played by customers, are to be included in gaming revenue for the purpose of calculating casino duty”.
SkyCity then appealed the decision to the High Court, which also sided with the Treasurer.
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“The High Court has 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,” SkyCity said today.
The SA Treasurer also lodged a cross appeal relating to interest payable, after the Court of Appeal ruled in February that a clause on paying interest was unenforceable – in favour of SkyCity.
Today, the High Court ruled in favour of the Treasurer’s position which leaves SkyCity facing up to $25.3 million in penalty interest on the unpaid casino taxes.
The question of the amount of interest payable on outstanding duty remains to be determined by a single Judge of the Supreme Court of South Australia at a later date.
SkyCity put $13.1 million aside earlier this year in case it was forced to pay the state Treasury the unpaid taxes but has not recognised a provision for the potential exposure to the penalty interest payment “as there remain a range of potential outcomes and no present obligation exists”.
“This is a long-running matter involving highly technical tax issues regarding the calculation of casino duty,” SkyCity CEO Jason Walbridge said.
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“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.”
Treasurer Stephen Mullighan welcomed the High Court’s decision.
“Today’s decision confirms that SkyCity must meet its tax obligations to South Australians and that its loyalty points are to be treated as gambling revenue, under the Casino Duty Agreement,” Mullighan said.
“While I welcome today’s decision, it is frustrating that SkyCity has engaged in such a lengthy, time-consuming, and expensive legal process.”
For SkyCity, the High Court decision follows a nearly 2000 per cent decrease in profits in FY24 amid an ongoing investigation into whether the company is suitable to hold a casino licence in South Australia.
SkyCity, which runs five casinos across Australia, New Zealand and online, recorded a net loss of $130.8 million in the 12 months to June 30, a 1897.4 per cent decrease from the previous report.
Underlying group net profit after tax (NPAT) was down 7.2 per cent to $112.4 million, while underlying revenue saw a 0.3 per cent increase to $875.6 million, $664.0 million of which was attributed to gaming.
Earlier this year, SkyCity paid a $67 million civil penalty payment following a Federal Court finding that its anti-money laundering and counter-terrorism financing programs failed to meet legislative requirements.
Former Supreme Court Judge Brian Martin KC is currently investigating SkyCity Adelaide’s suitability to hold a casino licence in South Australia, with a determination expected by December 31 this year.
