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Sky City sets internet rules

By Nicholas Bryant

Friday 18th August 2000

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Gaming company Sky City plans to take a punt on internet-based investments outside Australasia - but is to steer clear of ventures based in tax-haven countries such as the Bahamas.

Announcing a record annual profit this week, Sky City managing director Evan Davies said the company would probably look to invest in the internet further afield than just Australia. But tight self regulation will limit its scope.

Last month Sky City signalled it was taking a 6.8% stake in Canberra-based internet bookie Canbet.

But a powerful lobby backed by Australian Prime Minister John Howard is pushing for an end to internet gaming on Australian soil.

Canbet's operators say "no worries." If it is thrown out of Australia it will set up in a country with looser regulations such as the Bahamas.

That might not suit Sky City, which has invested in positioning itself as community-minded and said it would back away from ventures in those countries.

"A relocation might reduce the attractiveness of Canbet ... from Sky City's perspective any business not located in an environment such as Australia reduces its attractiveness.

"We will not operate in any environment which might reduce our hard-earned perception of self commitment to probity and openness," Mr Davies said.

In a big year, especially on the gaming tables, Sky City announced an annual result to June 30 on Wednesday better than analysts and even the company itself predicted.

Mr Davies said profitability in non-gaming areas had exceeded expectations as little drop-off had occurred following the America's Cup boom.

Revenue grew across all sectors of the business, with total revenue up 15% on the previous year to $294 million with a gross margin of 60%.

The biggest chunk of that came from gaming, $240 million of revenue, up 15%.

The company produced a net surplus after tax of $60.3 million, an increase of 32% on last year's result of $45.6 million.

Shareholders got a good payday with a final dividend of 32c a share declared, taking the full-year dividend to 56c.

Apart from opportunities in internet gambling aside, analysts are looking for action from Sky City's Adelaide Casino, which is to receive a $12 million revamp, and the Queenstown Casino which opens in December.

On Wednesday Sky City shares were up 25c at $7.70.

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