SKYCITY faces Queenstown license dilemma

NZ SkyCity
NZ SkyCity

SKYCITY has a problem in Queenstown, New Zealand’s premier resort town and it knows there are no easy solutions.

The company has both the casino licences in the town, but both casinos are in leased premises and at least one site is woefully inadequate for its purposes, a situation the company has often acknowledged.

SKYCITY spokesman Colin Espiner confirmed that the company was very keen to continue operating in Queenstown and was actively exploring all options.

What to do is taking up time for the board and management as they consider a series of options. Compounding the difficulties is some large legal issues, which may prove unsolvable under current legislation.

One option would be for SKYCITY to quit the building on Queenstown wharf which houses its smaller and less attractive casino, when the lease expires in two years time.

New Zealand legislation requires casino operators to have two licences:  one to operate a casino, and the second (called a Casino Venue Agreement) for the set of premises where the casino is located.

This option is unattractive because the legislation prohibits the transfer of an operator’s licence from one set of premises to another.

The second and larger casino is in the downtown area of Queenstown, but is also in leased premises. It has a longer lease, and the casino itself is more attractive as a venue for international visitors, but is still short of the standard SKYCITY would prefer to provide.

Redevelopment and expansion on this site would be difficult and might well involve closing the operation for many months, with the attendant loss of revenue and staff issues, but would likely avoid the problem of the legal inability to transfer casino licences from one set of premises to another.

Another option would be to build a purpose designed integrated resort. This might be near the town rather than in it – land being scarce and very expensive in Queenstown itself.

That would almost certainly entail an investment of several hundred million dollars and take many years, assumes that a suitable site can be found and the necessary development and building consents obtained to build.

However, this option stumbles on the same legal issue of the transfer of an operator’s licence even where the second set of premises meets the requirements for a premises licence.

SKYCITY has four of the six casino operating licences available in New Zealand, and the government has banned the issuing of any new licences.

If SKYCITY were to surrender a licence in Queenstown it could apply for it again for any new premises, but this would be a competitive process and involve public hearings about whether a casino should be permitted to operate at all.

While this route – if completed successfully – would resolve all of the legal issues involved, it is also be the most risky and most expensive and could result in a licence being refused or awarded to another operator.

Gambling Commission Chairman Graeme Reeves said SKYCITY was well aware of its legal position and of the issues involved.

One possible option would be to seek government co-operation to change the law to allow casino operators to move their licences from one set of premises to another – subject to the approval of the Gambling Commission – but so far this has not been raised with the government.