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)
30 Comments
Yes, the planned South Sea Financial Hub of the type we failed to imagine - nonetheless, I guarantee this will be justified as another spur of "God's work" - no moral hazard intended.
Goldman Sachs has much to answer for:
Is it possible to make too much money? “Is it possible to have too much ambition? Is it possible to be too successful?” Blankfein shoots back. “I don’t want people in this firm to think that they have accomplished as much for themselves as they can and go on vacation. As the guardian of the interests of the shareholders and, by the way, for the purposes of society, I’d like them to continue to do what they are doing. I don’t want to put a cap on their ambition. It’s hard for me to argue for a cap on their compensation.”
So, it’s business as usual, then, regardless of whether it makes most people howl at the moon with rage? Goldman Sachs, this pillar of the free market, breeder of super-citizens, object of envy and awe will go on raking it in, getting richer than God? An impish grin spreads across Blankfein’s face. Call him a fat cat who mocks the public. Call him wicked. Call him what you will. He is, he says, just a banker “doing God’s work” Link
So are the nay sayers saying that these extra pokies and tables will make our gambling problem worse? And conversely are they saying that the removal of all pokie machines and gaming tables would remove the gambling problem? My response is as long as we have the internet - gamblers will gamble. A few more pokies and tables at Sky City won't make a blind bit of difference.
What this does serve to highlight is where the tobacco industry have been going so wrong with their campaigning these past years. Instead of wasting all that cash on their anti-plain wrapping TV campaign, they should have offered to build National a new sports stadium/ arts centre/museum. In no time at all they would have been allowed to get their advertising on every school bus in the land. National seem to be open to almost every offer, so get to it tobacco boys, you know you want to.........
New convention centre, great. More jobs, great.
Huge focus on the assumption that there will be more problem gamblers, predictable. Last time I checked there were plenty of pokies for problem gamblers to waste money on, giving them a better selection isn't going to make the problem better or worse.
"Key said the link between the number of pokie machines and problem gamblers was arguable, but had been reducing for some time."
That slightly mangled sentance suggests Key said the link was decreasing, but I'll assume the later part was just talking about the number of machines.
It is arguable in the sense that industries profiting from it find the link arguable. There is a correlation between problem gambling and the forms of gambling that make it easy for people to gamble on a daily basis and get instant results. The issues around does it cause or facilitate (and to what degree) are murkier.
That said, the strongest effect for reducing problem gambling seems to be funding health services for addiction treatment (though that is an actively funded intervention rather than a passively funded ban). In those few jurisdictions that have actually banned slot machines, recent analysis is that about half of problem gamblers playing slot machines quit gambling, the other half swap to other forms (casino, races, online).
This is the mark of the man, indifferent, unaware, self righteous, and smug to the point of holding the average citizen......in contempt.
Yes , rozgonz and Happy 123 it will create more gamblers and the associated addiction that comes with it.
For you to have and share the opinion Key has , it shows your lack of knowledge on just how the Casino operates to grow the customer base and entice the existing clientele to spend ever more time and money on the premises.
Is it that you think they just wait around for walk ups and settle on whatever they spend..? would that be the Corporate think on it.....no it wouldn't , as growth of customer base and maximising profit are the first priority of this Corporate just like any other....so don't be dim yes..?
With it clear in the mind that Sky city must realize a return on this investment, the Administration has wittingly condoned the growth of the gambling industry and therefore the associated problems that arise from it.
Before you leap to any defence that Sky City intervenes with problem gamblers , I'm here to tell you loud n clear they do no such thing in reality.
Just for the record , someone close to me one sunny afternoon a couple of years back, took a gun from the lockup and shot himself, leaving many to wonder at what point he felt he could no longer recover his dignity. For whatever his problems were, gambling became the accelerant not the answer......so yes, I get bitter about it, but one day you might too.
I appreciate the financials in your comment Kimy, but I do disagree, as dignity or the loss of it cannot be measured in monetary terms.....the flow on effect of those who reach the point of despair reaches out to engulf many (blameless) lives whether by flood or trickle down, their pathways are altered.....such is the tragedy in addiction.
Don't however miss my point, personal cases aside the Gambling Corporations are not benign in their presence, their behaviour, their intention to ...grow...gamblers, if it were just the amusement, they would go broke, as the industry requires a core base of regular committed participants.....these are people here Kimy, people who may be responsible for the well being of other people.
And if that is not legalised drug pushing...! Then I may as well accept I've learnt nothing in this life.
There is a connection between Housing and a Casino
As the dream of home ownership fades for the self-supported young, thoughts turn to the "quick buck" arena as a means of getting a foothold on the housing ladder .. and instead of fixing what ails the housing dream .. johnson .. expands the "house of dreams" .. is called priorities
Ambrose Evans-Pritchard has been talking to Braulio Rodriguez, the Archbishop of Toledo about the social upheaval in Spain.
Its not good
The Archbishop said the debt crisis is a symptom of a deeper malaise. The roots lie in the "moral disarmament" of the last quarter century. A `get-rich-quick' culture of "stupid consumption" and "deranged indebtment" has corrupted public life. Children have been brought up to wallow in self-gratification.
"This is common to the whole of Western Europe. It goes back to the core issues of moral philosophy, of what we are as human beings. It is here that we must search for a way out of the impasse," he said.
To me gambling seems like the classic get-rich-quick scheme and NZ should not be encouraging it. Its a vice.
Get quick rich quick mentality and the corruption that seems to go with it as explained by
Columbia Economist Dr. Jeffrey Sachs
(This video posted previously on interest co nz)
http://www.youtube.com/watch?feature=endscreen&v=hCCr-uiqtAY&NR=1
Dont know about Midas complex but I would say he certainly has the Midas touch. The country is on target for 2015 surplus following the biggest resession since the thirties which is an incredible feat. And thats without the help of mining or oil. Once these get going imagine how much more this country will propser.
A great time to be in NZ.
But the extra pokie machines will definitely be used regularly bringing revenue to the SkyCity Management. Any doubt who is the clear winner in this deal?
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