Australian SkyCity sues state government

The deal, signed when the South Australian Government was anxious to unload the casino in 2000, was broken by the government when it brought in a new levy of us$ 1.2 million to pay for the Office of Liquor and Gambling Commission to oversee it in 2004.

The TAB was hit by the same levy. SkyCity and the TAB's owner, Unitab, are now enmeshed in a legal battle to overturn the new levy that was first introduced by way of a gentlemen's agreement in 2004 and that became law when the government got its Statutes Amendment (Investigation and Regulation of Gambling Licensees) Bill up in 2007.

The Opposition, SA Business and SkyCity's legal team all believe the law breaks existing commercial agreements between the State Government and South Australian businesses. Business SA CEO Peter Vaughan said a deal is a deal and should only be altered by the consent of all parties involved.

“It sends the wrong message to other companies and potential investors concerning the credibility of the State Government,” Vaughan said in a letter opposing the law change. SkyCity has a $70 million capital spending plan for a six-storey underground car park between the casino and Festival Centre.

SkyCity's local manager David Christian said the Adelaide Casino had to compete for investment funds in competition with SkyCity casinos in Darwin, Hamilton, Auckland and Adelaide. “With a state taxing regime the highest by a long margin, money invested in Darwin or Auckland has a much better chance of generating a dividend than Adelaide,” Christian said. “So getting a business case for a us$ 70 million investment up at a board meeting is proving difficult.”

The SA Government says it believes in a robust regulatory regime for all gaming outlets, including the Adelaide Casino. Opposition business spokesman David Ridgway said dishonoring its commercial contract was exactly what the government was doing with the new law. “It is incredibly important that people looking to invest in SA have confidence in this government,” Ridgway said.

Businessman and parliamentarian Iain Evans wanted to know why only the Adelaide Casino and the TAB were being hit with the new charge. “Is it because they are the big fish and they do not carry political weight in the same sense that the pubs and clubs or the racing industry carry political weight?” Evans asked.