By Bernard Hickey
The Government and casino operator Sky City Entertainment Group have signed an agreement this morning that will see Sky City build an international convention centre in central Auckland for NZ$402 million in exchange for licenses for an extra 230 pokie machines and an assurance about extending Sky City's license to operate from 2021 to 2048.
"I think it's a day of celebration for New Zealand and Auckland," Prime Minister John Key told TVNZ's Breakfast programme, referring to the likely creation of 1,000 jobs to build the centre and 800 ongoing jobs.
Key said it would also attract more overseas visitors that typically spent NZ$318 a day, versus about NZ$200 a day for tourists.
Key said the number of pokie machines in New Zealand and Auckland had been reducing for the last 6 to 7 years. "This will slow the rate of decline, but nevertheless over time the decline will continue," he said. Key said the link between the number of pokie machines and problem gamblers was arguable, but had been reducing for some time.
"The opposition will be television tonight yelling and screaming about how terrible this is, but they'll have a terrible dose of amnesia, because this is exactly what happened when the first convention centre was built in Auckland."
Economic Development Minister Steven Joyce later announced the deal at a function at Sky City.
He said the New Zealand International Convention Centre would cater for 3,500 international conference delegates at any one time. It would be built for a total estimated project cost of NZ$402 million, including NZ$315 million in construction and fit-out costs and NZ$87 million in land costs. Construction would start in 2014 and the centre would open in 2017.
“An international convention centre in Auckland will be a major asset for New Zealand and will generate significant spin-off benefits including a projected $90 million annual injection into the economy," Joyce said.
“It’s estimated this new facility will attract around 33,000 more conference delegates each year.”
Under the agreement, SkyCity would meet the full project costs of the convention centre – estimated at NZ$402 million – in return for the following:
· An extension of SkyCity’s Auckland casino licence, due to expire in 2021, out to30 June 2048, and an amendment to cover all of SkyCity’s properties in Federal Street
· An additional 230 “pokie machines” on the casino floor
· An additional 40 gaming tables
· A further 12 gaming tables that can be substituted for automated table game player stations (but not “pokie” machines)
· Up to 17 per cent of pokie machines and automatic table games (in restricted areas only) being able to accept banknotes of denominations greater than $20
· Introducing TITO (ticket in, ticket out) and card-based cashless gaming technology on all pokie machines and automatic table games at Auckland casino.
Sky City would operate the convention centre for at least 35 years, Joyce said.
Joyce said SkyCity would have enhanced measures to deter problem gambling and money laundering including; a predictive modelling tool that analyses data to identify players at risk of problem gambling, a voluntary pre-commitment system where players can elect to restrict the amount of time they play or the amount they spend, doubling the number of 'Host Responsibility' specialists to deliver 24-hour, seven-days-a-week coverage and the introduction of player identification requirements when amounts over NZ$500 are being put onto, or cashed from, TITO tickets in non-restricted areas.
Joyce said an independent assessment by financial advisory firm KordaMentha had described the value of the concessions made to SkyCity in exchange for the construction and operation of the International Convention Centre as reasonable for both parties.
Joyce said the 230 new ‘pokie’ machines is the same number granted to SkyCity under the previous Government in 2001 for the development of the existing Sky City Convention Centre.
He said legislation would be required to give effect to the final agreement.
“This agreement to build a world-class convention centre is a good deal for New Zealand that will create jobs, boost tourism, and bring significant benefits both to Auckland and to the New Zealand economy,” Joyce said.
“For years the tourism industry and business sector have been asking for an international-sized convention centre to be built in New Zealand to ensure we compete with Australia and Asia by tapping into the growing market of high-value business visitors.”
Compensation deal
The deal includes a clause that means SkyCity would be entitled to compensation if any new government changed the rules.
"The Government has agreed that if the Crown acts in a way to change the concessions as listed in the agreement, SkyCity will be entitled to compensation under the agreement calculated by reference to the KordaMentha report," Joyce said.
"Given the size of the investment, SkyCity needs some certainty about what would happen if any of those concessions were changed. For that reason, the agreement says that if the regulatory concessions are changed before the 35 year period is up, SkyCity will be compensated by the Government under the agreement," he said.
"Any compensation paid to SkyCity would be equivalent to the concessions lost over the time period for which they are not available to SkyCity. Any compensation will never exceed SkyCity’s total investment in the NZICC (land and building) and any other assets it acquires or develops as a consequence of the agreement with the Crown."
The Government would also compensate SkyCity for any increase in casino duty from the signing of the full agreement until four years after the completion of the NZICC. Joyce said the Problem Gambling Levy was not covered and any change in the Problem Gambling Levy was not subject to any compensation.
(Updated with more quotes from Key, details of agreement, quotes from Joyce)
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