SkyCity Sets Aside $29.2M for Upcoming AUSTRAC Penalty

Casino and hospitality company SkyCity Entertainment has set aside AUD 45 million (around USD 29.24 million, current conversion rates) for a potential penalty. The operator expects to be hit by a fine because of its recent anti-money laundering (AML) and combating the financing of terrorism (CTF) breaches.

SkyCity admitted that it is currently available to determine what the size of the potential penalty will be since the AUSTRAC proceedings are still ongoing. The $45 million set aside by the company considers the worst-case scenario where each of its violations would lead to a maximum civil penalty of $18-22.2 million (USD 11.7-14.4 million).

The casino & hospitality giant added that it cannot say with certainty when the penalty will be issued and explained that the size and timing of the fine will depend on multiple factors. According to SkyCity, the court is bullish on understanding the full context behind the breaches before handling an appropriate penalty.

SkyCity’s Business Is Under Fire over Regulatory Violations

In December 2022, the AUSTRAC commenced civil penalty proceedings against SkyCity, alleging that the company has committed serious AML and CTF violations. According to the financial intelligence agency, the company has allowed 59 suspicious patrons to launder billions of Australian dollars at its property in Adelaide.

The court proceedings followed an earlier inquiry that probed the company’s business and called for submissions from interested parties and stakeholders.

In May, SkyCity was required to employ the services of an independent reviewer who would evaluate the company’s AML and CTF programs. This came after the prior review was put on hold because of the ongoing court proceedings.

Depending on how the situation unfolds, SkyCity may also be found unsuitable to hold a casino license.

SkyCity Expects Its Metrics to Remain Stable

In the meantime, SkyCity unveiled a $45.6 million (USD 29.6 million) write-down on the Adelaide casino license.

SkyCity also added that it does not expect the ongoing situation to affect its earnings for the year. In addition, the company expects adjusted EBITDA levels to remain stable at around $276.6-285.4 million (around USD 165.5-$170.8 million).

In other news, Star Entertainment Group, which was also involved in similar proceedings, recently secured a tax relief deal in New South Wales. While the company will have to pay more in the long run, the agreement will allow it to sort out its finance in the wake of the regulatory trouble.