SkyCity Shares Slip on Announcement of Potential Lawsuit over Money Laundering Breaches
SkyCity’s shares slipped on Monday as the New Zealand casino operator announced that its subsidiary, Skycity Casino Management Ltd (SCML), could face a proposed lawsuit for alleged breaches of anti-money laundering laws.
The news caused SkyCity Entertainment’s shares to fall by up to 2.4% to NZ$2.03, marking their largest daily loss since December 19. If the current trend persists, the casino operator could suffer a significant setback.
The Internal Affairs Department of New Zealand is planning civil proceedings against SCML, with potential penalties of up to NZ$8 million ($4.91 million).
In response to the news, SkyCity expressed disappointment over its failure to meet the necessary compliance standards and assured its commitment to cooperate with the department. The company had initiated a program in late 2021 to improve its compliance with anti-money laundering and terrorism financing laws.
The department is currently evaluating the implications of its review on SkyCity’s compliance. In September, the department had requested a temporary suspension of SCML’s licenses due to non-compliance with certain conditions.
SCML is responsible for managing SkyCity’s licensed casinos in Auckland, Hamilton, and Queenstown.
Analyst comment
Negative news: SkyCity’s shares slipped as its subsidiary faces a proposed lawsuit for breaches of anti-money laundering laws. Shares fell 2.4%, their largest daily loss in months. If the trend continues, the casino operator could suffer a setback. Penalties of up to NZ$8M are possible. The market may react with caution and uncertainty towards SkyCity due to this potential legal and compliance issue.
