In June, the government announced plans to implement a casino tax increase originally proposed by the previous administration. The current government confirmed in December 2022 that tax rates for land-based casinos would rise effective 1 July this year.
The planned increases included a rise in the non-rebated duty rate from 17.91% to 20.25%, while the rebate duty rate would increase from 10% to 12.5%. Additionally, the poker machine duty rate was set to shift from a flat rate of 20.91% to a tiered system. This system proposed a 0% tax rate on machines generating under AU$2,666 per month, escalating to a maximum of 60.67% for machines earning over AU$12,000 monthly.
Star, the operator of Star Sydney casino in New South Wales (NSW), criticized the proposals as "flawed" and unsustainable. In reaction to these concerns, the NSW treasurer agreed to meet with Star for discussions regarding amended tax rates. Subsequently, an in-principle agreement was reached, though formalization is required before implementation.
The revised tax rates are more favorable than the initially proposed ones. The new rebate play rate will increase to 12.5%, while the non-rebate play rate for table games will proceed as planned to 20.25%. For poker machines, the non-rebate play tax rate will remain at 20.91% until 30 June 2030. Starting on 1 July 2024, this rate will rise to 21.91%, followed by another increase to 22.91% on 1 July 2027. After 30 June 2030, a tiered tax system will be implemented as proposed. Under this system, machines with an average monthly revenue below $2,666 will be exempt from tax, while those earning between $2,666 and $6,667 will be taxed at 37.6%. The next tier, for revenues from $6,667 to $12,500, will incur a 42.1% tax, and machines exceeding this will be taxed at 51.6%, all exclusive of GST.
From 1 July 2030 to 30 September 2030, Star may request a good faith review of the poker machine rates and thresholds. Additionally, an extra levy set at 35% of Star Sydney’s gaming revenue over $1.13 billion per financial year will take effect from 1 July 2023 until 30 June 2030. The current responsible gambling levy of 2% remains unchanged and will not apply to the new additional levy.
Star CEO and managing director Robbie Cooke stated that the revised rates would protect jobs in NSW as well as the viability of Star Sydney. He noted, "While the in-principle agreement will result in an uplift in duties payable to the state, it has due regard to the circumstances of our Sydney business," adding that this arrangement is intended to facilitate a sustainable future for the casino. The expected additional duty payments for FY24 are approximately $10 million. Cooke emphasized the goal of providing employment stability for team members in cooperation with the United Workers Union, stating that the arrangement would support significant reforms needed to restore Star Sydney's suitability and regain community trust.
The modified tax rates come at a crucial time for Star, which has endured challenges in NSW. In April, the company announced plans to pursue cost-saving and restructuring initiatives after reporting a "significant" and "rapid deterioration" of operating conditions. Star has faced multiple parliamentary inquiries regarding misconduct and aims to reform its operations due to increasing regulatory pressures and exclusions, coupled with a drop in consumer spending. The Star Sydney casino, while still its primary revenue source, faces challenges from a competitive environment impacted by the termination of junket affiliations.
