The Northern Territory Government in Australia has granted Sky City Entertainment exclusive casino rights until 2026 and renewable. Shares of the New Zealand company rose on the news, following market underperformance over the last three months. However, some analysts are predicting that growth will remain stagnant as Auckland Casino represents around 70% of Sky City business and legislation will not allow further expansion there.

The conditions of the favourable licensing include a commitment by Sky City to invest A$30 million (US$23.6 million) in improving the property. As Sky City has recently spent US$31.3 million on upgrading its Auckland facility, the terms of the agreement should not be too arduous. The Darwin casino accounts for just one-tenth of Sky City Entertainment EBITDA. Managing Director, Evan Davies, described the agreement as a positive outcome for SKYCITY, providing investment certainty.

“The growth in Darwin shows no signs of abating, with the economy predicted to expand 6.2% this year. Tourism is also growing rapidly, with 16% more Australian tourists and 5.7% more international tourists visiting Darwin in the past year," Evan Davies said. He added, "SKYCITY’s strategy is to invest in existing facilities and diversify our entertainment interests while maintaining strong capital management. This agreement gives us the security to plan development of the SKYCITY Darwin property to meet growing customer demand, within the framework of our investment criteria."

Key features of the A$30 million upgrade at SKYCITY Darwin include the expansion and refurbishment of the main gaming floor to refresh and improve the customer experience. A new 180-seat a la carte restaurant will be developed, offering both indoor and outdoor dining, combined with a major extension to the Sunset Restaurant deck. A second level new bar and outdoor deck will also be built. All these new facilities offer magnificent views over Mindil Beach and the Arafura Sea. The project is expected to be completed by mid-2008.

In October 2006, SKYCITY was also named preferred tenderer by the Northern Territory Government to acquire the Little Mindil beachfront site, adjacent to the existing Darwin property. The final terms and conditions for the acquisition of the Little Mindil site are currently in negotiation. (E-01.19.07)

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