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Star agrees to reduce tax increases in New South Wales

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The casino operator Star Entertainment reached an agreement in principle with the New South Wales government regarding increased tax rates.

In June, the government announced that it would pursue an increase in casino tax proposed by the former administration. The current government announced that the land-based casinos tax rate would be increasing in December 2022. This increase will take effect on 1 July of this year.

The planned increases include a non-rebated rate of duty rising from 17,91% to 20,25%, and a rebate rate that rises from 10.00% up to 12,50%.

The poker machine tax rate will also be changed from the flat rate of 20.91% to a tier system. This ranged from a 0% rate on machines making under AU$2,666 (PS1,369/EUR1,583/US$1,741) a month, up to 60.67% for machines with over $12,000 monthly revenue.

Star has criticised the proposal, calling it “flawed”, and claiming that they are not sustainable. Star Sydney is the casino operated by Star in NSW.

The NSW Treasurer responded by agreeing to meet Star in order to discuss the new rates. In principle, the operator and Star have reached an agreement. However, these agreements must be formalised before they can take effect.

Taxes lower than the proposed rate

The new proposed rates increase the rebate rate from 10% to 12.5%. The rate of non-rebate table game play will also increase from 17.91% as planned to 20.25%.

The non-rebate rate of play for poker machines (also known as pokies) will continue to be the same until 30th June 2030. The current rate is 20.91%, excluding GST (goods and services tax).

This rate is expected to rise from 21.91% to 22.99% on July 1, 2024. It will then increase to 22,91% in July 20,27. The government had proposed a tier system after 30 June 2030.

Tax will not be due on machines with an APR (average poker machine revenue) below $2,666. Taxes will apply to those who earn between $2,666 and $6,667. Next, machines between $6667 and $12,500 are taxed 42.1%. Machines above that threshold will also be subject to a 51.6% rate.

Star can request that pokies thresholds and rates be reviewed in good faith between 1 July and 30 Sept 2030.

For other rates, a levy of 35% will be added to the Star Sydney Gaming Revenue above $1.13bn per financial year. The levy will be in effect from the 1st of July, this year until 30th June 2030.

The government has also confirmed that the responsible gambling levies will not be changed. The levy will remain at the 2% rate and not be applicable to the additional levy.

Star CEO: Revised rates protect jobs

Robbie Cooke, Star Sydney’s CEO and managing Director said that the new rates would protect the jobs of NSW as well as the viability and future of Star Sydney.

Cooke stated that “While this in principle agreement may result in a rise in the duties payable to state, it takes into account the particular circumstances of Sydney’s business.” As such, it helps create a path for Star Sydney to move forward in a sustainable manner. Around $10.0m is expected to be paid in additional duties during FY24.

The agreement with United Workers Union also provides employment security for the team.

The arrangements allow us to work at a faster pace in order to complete the necessary reforms to bring Star Sydney back to its former glory, regain the trust of our community, and continue to be a valued contributor to NSW’s economy.

Star tries to restore trust in NSW

Star will be relieved by the new rates, as it has been going through a difficult time in NSW.

Star announced in April that it was launching cost-cutting and restructuring efforts. It did so after warning of a “rapid” and “significant” deterioration in state operating conditions.

Star was the subject of several parliamentary investigations into allegations of misconduct. The company has also announced plans for reorganization due to regulatory conditions, exclusions and other factors. Star stated that this negative environment was caused by a “new weakness” in the consumer’s spending.

Star Sydney Casino, which is still the company’s largest source of income, “continues operating in an unbalanced competitive environment”. The impact is due to ending junket affiliates.

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