Star reaches agreement for reduced tax hike in New South Wales

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Casino operator Star Entertainment has reached an in-principle agreement with the New South Wales (NSW) government over increased tax rates in the Australian state.
Star tax hike, casino tax, revised rates

The government in June announced plans to pursue a proposed rise in casino tax set out by the previous administration. In December 2022, the existing government said land-based casino tax rates would increase with effect from 1 July this year.

Planned increases included on-rebated duty rate rising from 17.91% to 20.25% and rebate duty rate 10.00% to 12.50%.

In addition, poker machine duty rate would switch from a flat 20.91% rate to a tiered system. This ranged from a 0% rate on machines making under AU$2,666 (£1,369/€1,583/US$1,741) a month, up to 60.67% for machines with over $12,000 monthly revenue.

However, this led to criticism from Star, which branded the proposals “flawed” and said they would not be sustainable. Star operates the Star Sydney casino in NSW.

In response, NSW Treasurer agreed to meet Star to discuss amended rates. The operator has now reached an in-principle agreement, though these must first be formalised in order to come into effect.

Reduced taxes lower than proposed rates

Proposed new rates include rebate play increasing from 10.0% to 12.5%. It was also agreed the rate for non-rebate play on table games will rise from 17.91% to 20.25% as planned.

In terms of poker machines, also known as pokies, the non-rebate play rate will remain as planned until 30 June 2030. This is currently set at 20.91% excluding goods and service tax (GST).

However, from 1 July 2024, this rate will rise to 21.91%, and then again on 1 July 2027 to 22.91%. After 30 June 2030, the rate will switch to a tiered system as previously proposed by the government.

Machines with an average poker machine revenue (AMPR) under $2,666 will not need to pay tax. Those making between $2,666 to $6,667 will be taxed at a rate of 37.6%. The next bracket of $6,667 to $12,500 face a rate of 42.1%, and machines above this threshold will be taxed at 51.6% – all exclusive of GST.

Between 1 July 2030 and 30 September 2030, Star may request a good faith review of pokies rates and thresholds.

As for other rates, an additional levy equal to 35% of Star Sydney gaming revenue above $1.13bn for each financial year will come into effect. This runs from 1 July this year to 30 June 2030.

In addition, the government confirmed there will be no change to the current responsible gambling levy. This remains set at a rate of 2% and not apply to the new additional levy.

Revised rates will protect jobs – Star CEO

Star CEO and managing director Robbie Cooke said the amended rates will protect jobs in NSW and the viability of Star Sydney.

“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,” Cooke said. “And as such helps to create a sustainable path forward for Star Sydney. The expected additional duty payable in FY24 is circa $10.0m.

“It is also designed to provide employment certainty for team members in arrangements agreed with the United Workers Union.

“The arrangements enable us to continue working at pace to implement the significant reforms required to restore Star Sydney to suitability, earn back the trust of the community, and ensure we remain a valuable contributor to the NSW economy.”

Star seeking to regain trust in NSW

The amended rates will come as a welcome relief to Star, which has faced something of a challenging period in NSW.

In April, Star said it would engage cost and restructuring initiatives. This came after it warned of “significant” and “rapid deterioration” in operating conditions in the state.

Star has been the target of multiple parliamentary inquiries into misconduct. It has also set out plans to restructure due to the compounding impact of regulatory operating conditions and exclusions. When combined with an “emerging weakness” in consumer spending, Star said it had led to this adverse environment.

The business also said that its Star Sydney casino – still its largest single source of revenue – “continues to operate in an uneven competitive environment”. This is due to the impact of ending its junket affiliations.

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