Australian casino giant Star Entertainment Group has negotiated an agreement with the New South Wales (NSW) state government to have the full implementation of poker machine duty rates in the operator’s casinos deferred until the end of the decade. As reported, the Star and the government agreed upon a gradual increase of the gaming duties to preserve thousands of jobs and maintain the company’s economic viability.
Previous Poker Machine Tax Proposal:
As reported by Inside Asian Gaming (IAG), the agreement to bring the duties to what the Star calls ”sustainable levels” comes after the previous Coalition government proposed to impose around 60% duty on poker machine revenue at the Star Sydney casino. The company reportedly claimed that such a level would jeopardize the casino’s viability, as well as more than 3,000 casino jobs in the New South Wales province.
Agreement Reached at 20.91%:
The agreement reached on 11 August 2023 with the recently elected Labor government reportedly anticipates the maintenance of the current 20.91% tax on poker machines payable by the Star until the end of the current financial year. According to IAG, the tax will gradually rise to 22.91% falling due from 1 July 2027 until 1 July 2030. Beyond 2030, the tax on poker machines will reportedly be based on the revenue thresholds and ranging from 37.6% to 51.6%, for the revenue levels exceeding AU$12,500 (US$8,145).
Star’s Liabilities and Gains:
As reported by the Sydney Morning Herald, the negotiated arrangement will make the Star liable to maintain more than 3000 jobs until the year 2030. The same source also reports that the company will arrange 50 poker machines and eight VIP tables to be included in the state’s cashless gaming trial starting from October 2023. As a consequence, the Star’s share price has reportedly seen a 20% increase to hit AU$1.14.
According to IAG, the Star’s CEO and Managing Director, Robbie Cooke, commented: ”The formal consultative and structured approach implemented by the Government has enabled an in-principle agreement to be reached which protects our Sydney team’s jobs and the viability of The Star Sydney.”
Cooke reportedly said: “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 and as such helps to create a sustainable path forward for The Star Sydney. The expected additional duty payable in FY24 is circa AU$10 million (US$6.5 million).”
Company Remaining Viable:
Cooke reportedly pointed out the importance of the provided employment certainty within the company. Indeed, Sydney Morning Herald reported that the NSW Treasurer Daniel Mookhey commented that the absence of this agreement would make the Star unviable.
Seemingly aware of these words, the Star CEO reportedly added: “The arrangements enable us to continue working at pace to implement the significant reforms required to restore The Star Sydney to suitability, earn back the trust of the community, and ensure we remain a valuable contributor to the NSW economy.”
As reported by IAG, the company also said that the amended NSW casino duty rates will help the company to proceed with its financial plans and take advantage of respite while waiting for the 2024 re-activation of its gaming license reportedly suspended by NSW Independent Casino Commission.