NSW Look to Raise Casino Tax

The current government announced in December 2022 that land-based casino tax rates would increase starting on July 1st of this year.

NSW Look to Raise Casino Tax

The former government of the Australian state of New South Wales (NSW) has suggested raising the casino tax, and the NSW government has stated that it intends to do the same.

The current government announced in December 2022 that land-based casino tax rates would increase starting on July 1st of this year.

In addition, the rebate duty rate increased from 10.00% to 12.50%, and the non-rebated duty rate increased from 17.91% to 20.25%.

Additionally, the duty rate on poker machines would change from a flat charge of 20.91% to a tiered structure. For machines making less than AU$2,666 (£1,418/€1,658/US$1,813) per month, the rate ranged from 0% to 60.67%, and for machines making more than $12,000 per month, it was 60.67%.

The current government estimated that between 2023–2024 and 2025–2026, this might raise an additional AU$364.0 million.

These increases were inserted into the budget even though they were not legislated and passed onto the present administration as a legacy policy after the March election. Since then, the government and casinos have discussed implementing the new tax rates.

The government announced it would continue working on the law after the upcoming parliamentary winter break to allow these discussions to continue.

Poor Strategy

The ideas have, however, drawn criticism from some quarters. The proposed rise was described as "flawed" and "not sustainable" by Robbie Cooke, chief executive and managing director of land-based casino operator Star Entertainment Group.

Cooke commented, "This proposed duty increase was policy on the run by the former treasurer, was ill-conceived with no consultation and had no regard to the capacity of our Sydney operation to afford the impost."

"If implemented as originally proposed, the additional duty would significantly challenge the economic viability of the Sydney business and put the jobs of up to 4,000 hard-working Sydney employees in jeopardy."

Cooke mentioned that Star valued the government's involvement in the matter and would keep up the conversation about potential legislation and adjustments.

"We will continue to engage with the new NSW government to guarantee the jobs of our team members while working hard to implement the significant reforms required to restore The Star to suitability and to ensure it remains a valuable contributor to the NSW economy."

Conditions for Star are "deteriorating"

At a time when the company is already facing several challenges, should the government move forward with the tax increases, Star would face yet another difficulty.

Star said it is experiencing "significant and rapid deterioration in operating conditions" in April and that it will engage in cost- and restructuring-saving measures.

Due to the accumulated effects of regulatory operating restrictions and exclusions, Star has been the subject of numerous parliamentary inquiries into misbehaviour and has announced restructuring steps. According to Star, this unfavourable environment was brought on by the "emerging weakness" in consumer spending.

The company also claimed that the group's most significant single source of income, the Star Sydney casino, "continues to operate in an uneven competitive environment" due to the termination of its junket agreements.