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Adelaide casino operator SkyCity Entertainment Group (ASX: SKC) has to cough up an extra $13.1 million in casino duty to the South Australian Government following a High Court decision handed down today, ending a long-running dispute between the parties.
However, the company could also be liable for up to $25.3 million more in penalty interest pending a ruling for a Supreme Court judge.
The extra casino duty levelled against the New Zealand-headquartered group follows a failed appeal to the High Court over a disputed interpretation of the casino duty agreement secured between the company and the state in 1999.
SkyCity today says the High Court has confirmed the Court of Appeal's interpretation of the agreement that found credits on gaming machines that arose from the conversion of loyalty points played by customers are to be included in gaming revenue upon which casino duty is calculated at the SkyCity Adelaide casino.
The company says the decision means that, based on casino duties filed up to January 2024, SkyCity must pay an extra $10.3 million in casino duty on top of $2.8 million in extra duty following an earlier judgement from the Court of Appeal that was not appealed to the High Court.
SkyCity says that given the complexity of the issues involved, both parties agreed to seek declaratory relief from the South Australian Supreme Court to provide a “proper” interpretation of the 25-year-old casino duty agreement. SkyCity appealed that decision in the High Court which led to today’s decision against the company.
"This is a long-running matter involving highly technical tax issues regarding the calculation of casino duty,” says SkyCity’s CEO Jason Walbridge.
“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."
SkyCity says that a copy of the High Court's judgment is likely to be made publicly available shortly in accordance with court processes.
Despite today’s decision, SkyCity has already made a $13.1 million (NZ$14 million) provision in its FY24 accounts for the extra casino duty payable.
The company says that in relation to a cross-appeal by the Treasurer of South Australia, the High Court has ruled in favour of the Treasurer's position on the interest clause in the agreement.
“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,” says the company.
“If the Supreme Court's decision is unfavourable to SkyCity Adelaide in this regard, SkyCity Adelaide may be obliged to pay penalty interest on the additional casino duty, which could be up to around $25.3 million (as of 30 September 2024).”
The company says that as of 30 June 2024, SkyCity had not recognised a provision in relation to the potential exposure to penalty interest as there remain a range of potential outcomes and no present obligation exists.
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