SkyCity Entertainment Group reported a 22% drop in underlying EBITDA for FY26, impacted by regulatory costs and carded play rollout, while progressing asset sales and preparing for New Zealand's online casino market.
- Underlying EBITDA down 22.3% to NZ$181.6m
- Asset monetisation on track for $275-$300m proceeds
- A$21m fine settled with South Australian regulator
- Carded play rollout impacts gaming revenue
- Online casino licence auction set for late 2026
FY26 Earnings Reflect Operational Headwinds and Regulatory Costs
SkyCity Entertainment Group (NZX:SKC, ASX:SKC) delivered underlying EBITDA of NZ$181.6 million for the year ended 30 June 2026, a 22.3% decline from the prior year and within the revised guidance provided in May. The earnings drop reflects the combined impact of the nationwide rollout of carded play in New Zealand casinos, which reduced gaming revenue by an expected NZ$20-$30 million, and a challenging consumer environment exacerbated by geopolitical tensions and rising costs in the second half of the year.
Reported EBITDA fell 44.2% to NZ$120.5 million, weighed down by A$23.5 million in costs related to the Building a Better Business (B3) remediation program in Adelaide, a significant impairment charge of NZ$52.2 million against the Adelaide cash generating unit, and other accounting adjustments including provisions for a regulatory fine and property impairments.
Asset Sales and Debt Reduction Drive Balance Sheet Reset
The company is advancing a major asset monetisation program targeting gross proceeds of NZ$275-$300 million, expected to be realised by December 2026. This includes the unconditional sale of Auckland properties at 99 Albert Street and Victoria Street for NZ$74.5 million, with settlement scheduled for September, and a non-binding heads of agreement for the sale of The Grand Hotel, currently under due diligence and regulatory approval processes. Proceeds from these sales will be applied to debt reduction, aiming to reduce net debt to underlying EBITDA leverage from 3.1x in FY26 to below 2.0x in FY27, before any online licence payments.
In July 2026, SkyCity refinanced its syndicated bank facilities, consolidating two tranches into a single NZ$140 million facility maturing in September 2029, thereby extending its debt maturity profile and strengthening liquidity.
Regulatory Settlement in Adelaide and Strategic Review
SkyCity Adelaide reached a non-binding agreement with South Australia's Consumer and Business Services (CBS) regulator to resolve outstanding compliance issues following the Martin independent report. The settlement includes a A$21 million fine payable in three instalments over two years and requires enhanced governance and operational reforms, including the establishment of an independent Adelaide board and a locally accountable CEO by 2028. The B3 remediation program is now expected to complete in early FY28, delayed by design approvals and system implementation challenges. A strategic review of the Adelaide business is set to commence in the first half of FY27.
New Zealand International Convention Centre Opens, Online Market Entry Progresses
The New Zealand International Convention Centre (NZICC) opened on schedule in February 2026 within a NZ$750 million cost envelope. It hosted 141 events and attracted approximately 100,000 visitor days in FY26, with a strong pipeline of around 350,000 visits expected in FY27. The venue has received positive customer feedback and sustainability accolades, including Qualmark Gold and EarthCheck Silver certifications.
SkyCity is preparing for the launch of New Zealand’s regulated online casino market, with the Online Casino Gambling Act now in force. A licence auction is anticipated in September 2026, with market opening expected by June 2027. SkyCity has submitted an Expression of Interest and is pursuing a disciplined market entry strategy, leveraging its land-based presence and customer relationships.
Cost-Out Program Targets Significant Savings
In response to evolving market conditions and the introduction of online gambling, SkyCity is executing a group-wide operating model reset to deliver annualised cost savings of NZ$30 million in FY27, growing to NZ$70 million by FY28. The program, supported by Alvarez & Marsal, involves organisational redesign and right-sizing, with potential impacts on 200-250 predominantly New Zealand-based corporate and back-of-house roles.
Outlook and Dividend Policy
Due to macroeconomic uncertainty, SkyCity is not providing FY27 earnings guidance but expects to realise NZ$30 million in cost savings and to progress asset sales and regulatory settlements. The company aims to secure an online casino licence and launch operations in the regulated market. Capital expenditure for FY27 is forecast between NZ$80 million and NZ$100 million, excluding online licence costs.
SkyCity did not declare a dividend for FY26, with dividend resumption contingent on achieving capital management targets, including reducing net debt leverage and stabilising earnings.
Bottom Line?
SkyCity’s FY26 results underscore the operational and regulatory challenges facing the group, with asset sales and cost savings critical to restoring financial flexibility ahead of online market entry.
Questions in the middle?
- How will the strategic review reshape SkyCity Adelaide’s operations and governance?
- What impact will the online casino licence acquisition and market entry have on SkyCity’s future earnings?
- Can SkyCity sustain the planned cost savings without compromising customer experience or growth initiatives?