Spending at the country’s pokie machines may be down by 5% for the September quarter, but Sky City’s casinos are still well positioned to capitalise on organic gaming machine growth.

In the latest quarterly gaming figures from the Ministry of Internal Affairs, spending at the country’s pub and club gaming machines was down 5% for the three months to September and has fallen by 5.4% for the year.

Gaming machine spend was up 1.5% on the June 2009 quarter, even as the number of licence holders, gambling venues and gaming machines continues to drop.

Compared to the September 2008 quarter, licence holders fell 6.9% from 405 to 377, venues dropped 4.2% from 1551 to 1486 and gaming machines were down 3.6% from 20,025 to 19,296.

Despite the lower spend compared to last year, Forsyth Barr analyst Jeremy Simpson said Sky City’s casinos in Auckland, Hamilton and Queenstown were looking stronger in their gaming machine revenues than the pub market and the company was well positioned to take market share.

While the pub market fell 5.2% for the year to June, Sky City’s key Auckland gaming machine business was down 2.1% and even stabilised to be flat for the six months to June.

Mr Simpson said Sky City’s management initiatives to improve its product offer and marketing should see a further turnaround in the current year and solid upside over the medium term.

“With total NZ gambling spend per capita stagnating around $500 since 2004, we believe there is an organic growth opportunity for the sector with casinos well positioned to capitalise.”

He said the company remained well placed for medium-term operational upside from successfully leveraging off a refurbished Auckland casino that has the worst impact of full smoking bans and regulatory changes behind it.

“The successful Darwin casino has been substantially expanded and Adelaide continues to improve significantly. While a soft NZ economy remains a near-term risk, we expect further evidence of improvements being delivered at Auckland.”

Light should be shed over Sky City’s performance in the first quarter of the year when the entertainment group holds its annual meeting at the end of the month.

Sky City shares (NZX: SKC) were up 2.75% in late trading.