The financial crimes watchdog AUSTRAC’s investigation into SkyCity Adelaide has forced the New Zealand-based parent company to set $45 million aside to cover potential penalties and legal costs.

Also announced today, the value of the Adelaide casino has dived, with a further $45.6 million recognised as an impairment on the casino licence following a review of the property.

This totals approximately $91 million in newly announced provisions and impairments for SkyCity, which has deteriorated in market value by 17 per cent since AUSTRAC commenced civil penalty proceedings against the company in December last year.

The allegations against SkyCity Adelaide include claims that the North Terrace casino made $74 million from “high-risk” customers who had reported links to organised crime and that some gamblers used “cash that appeared to have been buried”.

AUSTRAC alleges SkyCity Adelaide engaged in “serious and systemic” non-compliance with anti-money laundering and counter-terrorism financing laws, and that “many” of the “high-risk” customers participated in junket programs contributing to customer turnover “in excess of $4 billion” and buy-ins “in excess of $464 million”.

Today, SkyCity says it has put aside the $45 million as an estimate of the potential penalties and legal costs it may be ordered to pay.

The company acknowledges that each of the contraventions alleged by AUSTRAC attract a maximum civil penalty of between $18 million and $22 million per contravention.

“As AUSTRAC alleges that SkyCity Adelaide contravened the AML Act on an innumerable number of occasions, it is not possible to determine a maximum penalty for the alleged breaches,” SkyCity said.

“This provision is an estimate of the potential exposure and legal costs associated with the proceedings, and considers a wide range of parameters that could potentially be considered by AUSTRAC and the Court.

“The proceedings remain at a relatively early stage with AUSTRAC and SkyCity Adelaide currently working towards agreeing facts and potential admissions before the Court identifies a process for any remaining disputed issues and any potential penalty to be determined.”

The company says that it is difficult to estimate the potential exposure to penalties at this stage of the legal process.

“The size of any penalty SkyCity Adelaide is exposed to could vary materially from the amount of the provision and significant uncertainties remain,” it says.

“SkyCity Adelaide will continue to cooperate with AUSTRAC more generally, particularly in relation to the ongoing implementation of enhancements to its Adelaide AML/CTF control frameworks.”

A $45.6 million impairment of the value of SkyCity’s Adelaide casino licence has also been recognised today, reflecting the falling value of the property amid the AUSTRAC review.

“This impairment considers both the value and the timing of future discounted cashflows generated by the licence as assessed at 30 June 2023,” SkyCity said.

Further details about the impairment are expected when the company releases its full year financial report on 23 August.

SkyCity stresses that the provision and impairment are non-cash and do not impact earnings for the full year.

The company anticipates that earnings remain in line with the guidance provided earlier this year of between NZ$300-310 million.

In addition to the AUSTRAC proceedings, SkyCity is also under scrutiny from a separate inquiry by retired South Australian Supreme Court judge Brian Martin which is probing whether the company is fit to hold the South Australian casino licence.

That inquiry was put on hold in February due to the Federal Court proceedings, leading to crossbench inquiries about the “government’s will” to address the issue.