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Is SKYCITY (ASX:SKC) A Good Bet For Growth?

Is SKYCITY Entertainment Group Limited (ASX:SKC) worth a bet on its latest growth plans?
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Jaz Harrison

Jaz is a Staff Writer for Rask. She is a keen investor who loves to thoroughly poke holes in an investment idea before it has a chance of making it into her portfolio. Jaz invests for the long-term and doesn't sweat the small stuff. She strongly believes that empowering people with knowledge is the best way for them to take charge of their finances, which is exactly the approach she takes with her own money and investments.
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Is SKYCITY Entertainment Group Limited (ASX: SKC) worth a bet on its latest growth plans?

Skycity is a casino and entertainment provider with complexes in Auckland, Hamilton, Queenstown and Adelaide. At some or all of these locations it also has hotels, restaurants, bars and conference facilities. On the ASX, Skycity’s key peer is Crown Resorts Ltd (ASX: CWN), the casino and gaming operator.

What Has Happened With SKYCITY?

SKYCITY announced that its Maltese subsidiary will partner with international e-gaming company Gaming Innovation Group Inc to provide New Zealanders with an online casino gaming platform.

The skycitycasino online gaming site will launch in the next few months and operate from Malta with a “.com” URL.

Under the current New Zealand law, only Government-owned Lotto and TAB are permitted to offer online casino gaming from within New Zealand, although many Kiwis use offshore operators to participate in that market.

Whilst SKYCITY will be operated from overseas, it will ensure its New Zealand GST obligations are complied with.

According to SKYCITY, the New Zealand online casino market provided by offshore operators is worth around $160 million, with these overseas providers not liable to pay local gaming tax, not likely to be paying GST in New Zealand and not required to comply with responsible practices.

The SKYCITY CEO said he would support regulation of the New Zealand casino market, with licensing, taxes and mandatory host responsibility requirements.

Graeme Stephens, SKYCITY CEO, said: “Online casinos are widely used by New Zealand customers and this trend will only continue. The world is rapidly moving online and our industry is no exception, so we have to ensure we remain relevant to changing consumer trends and preferences.”

Does This Make SKYCITY A Buy?

SKYCITY is not anticipating any meaningful contribution from earnings from its online business in the pre-regulation phase of the online casino market in New Zealand. However, the company sees this as a long term opportunity.

This move is a good signal that SKYCITY is planning for the future, but I think it’s far too early to base a buy decision on this move. It’s a decent dividend share idea but I would rather buy shares of the reliable businesses in the FREE report below instead.

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