In morning trade the SKYCITY Entertainment Group Limited (ASX: SKC) share price has edged higher following the release of an announcement.
At the time of writing the casino and resorts operator's shares are up slightly to $3.62.
What was announced?
This morning SKYCITY announced that its Maltese subsidiary, SKYCITY Malta Limited, will partner with international iGaming company Gaming Innovation Group to provide New Zealanders with an online casino gaming platform.
According to the release, the proposed 'skycitycasino' online gaming site is expected to be launched in the middle of the year and will be operated from Malta under a .com URL.
The company is operating the online gaming site from the small European island because only Government-owned Lotto and the TAB are permitted to offer online gaming from within New Zealand under current law. However, many New Zealanders freely participate in online casinos provided by offshore operators.
SKYCITY Chief Executive Graeme Stephens believes the skycitycasino online gaming site provides New Zealanders a brand name they can trust and advised that it will offer best-in-class host responsibility.
Although the online casino will be operated from offshore, it will ensure that its obligations under New Zealand GST legislation are complied with.
What is the market opportunity?
The existing online casino market in New Zealand is well established and offshore operators are estimated to be generating revenue of NZ$160 million per year.
Mr Stephens said: "Online casinos are widely used by New Zealand customers and this trend will only continue. The world is rapidly moving online and our industry is no exception, so we have to ensure we remain relevant to changing consumer trends and preferences."
He added: "As an established land-based casino operator with significant investments in New Zealand and a track record of compliance in a highly regulated environment, we know a great deal about host responsibility and harm minimisation. We believe the skycitycasino online gaming site offers customers an opportunity to enjoy playing in a safe, secure environment with a brand they know and trust and we will be striving to set the benchmark for any regulation in the future."
However, the company will be making a conservative entry to online gaming and intends to avoid the sales and marketing tactics adopted by some existing overseas operators. In light of this, Mr Stephens advised that SKYCITY is not initially expecting to monetise materially from this initiative and shareholders should see it as "a strategic entry into a space that we believe has long-term relevance."
Elsewhere in the industry today, the Crown Resorts Ltd (ASX: CWN) share price is down 0.5% and Star Entertainment Group Ltd (ASX: SGR) share price has risen 0.5%.
