Star Entertainment has claimed that there was no consultation from Government of New South Wales following the announcement of new casino tax arrangements that are said to aid funds vital services.
From July 1, 2023, the proposed casino tax will increase rates on what casinos earn from gaming tables and poker machines, which are forecasted to raise an additional $364m over the next three years.
Treasurer Matt Kean said the changes will support the state’s fiscal sustainability as it continues to invest in communities recovering from the unprecedented impacts of COVID-19, bushfires and floods.
He noted: “It’s important that casinos pay their fair share of tax. These reformed tax rates will replace the existing regime under which casinos pay less tax on poker machines than hotels and clubs.
“These changes will ensure that the casinos continue to make an appropriate contribution to the community and support the delivery of vital government services.”
Kean also highlighted that the new casino tax rates will help casinos support the ongoing contribution to the NSW economy.
The updated poker machine rate will bring NSW into line with Victoria, following recent reforms to casino taxation arrangements announced in the 2022-23 Victorian Budget.
However, the Star Entertainment Group, which has operations in Sydney, has expressed its concerns over the new arrangements and stated that there has been no consultation from the NSW Government with Star on the matter.
In a statement, Star revealed that it is seeking to “urgently engage” with the NSW Government as to the sustainability of the proposed tax changes and the impact on The Star’s business as it looks to fast track cashless gaming and card play to deliver safer gambling, whilst also continuing on a remediation path to return to suitability and earn back the trust of the community following a series of high profile sanctions.
The Star’s CEO and Managing Director, Robbie Cooke, commented: “We are not sure how the government modelled its financials nor the basis for suggesting The Star does not pay its fair share of taxes.
“Specifically, in addition to state gaming taxes, The Star also pays millions in corporate taxes, with total taxes paid as a percentage of The Star’s profits being around 70 per cent, and as high as 80 per cent in the last five years when all the tax regimes are considered.”
Once the announcement was made, shares in Star dropped nearly 12 per cent on Monday from $2.58 per share to $2. The following three days has seen its shares drop further to a low of $1.93 per share with the current value standing at $1.97.
The NSW Government, through the Responsible Gambling Fund, is spending $33m in 2022-23 to support people experiencing gambling harm, educating the community on the risks of gambling and investing in research to better understand gambling behaviour.
It also expressed that the 2022-23 NSW Budget is committed to allocating an additional $5m per year to the Responsible Gambling Fund, increasing in line with inflation.
This latest announcement rounds off a troublesome 2022 for Star Entertainment that has witnessed a barrage of sanctions, class action lawsuits, resignations and investigations surrounding its operations, with one concluding that it was deemed “unsuitable to hold its casino licence” within New South Wales.
This year alone, Star has been hit with two penalties, with the latest earlier this month resulting in the operator paying a A$100m penalty package and given a 12-month time frame to get its house in order as part of disciplinary actions against the firm.
The financial penalty applied, which mirrors the fee imposed in New South Wales, will be paid through 2023 in three instalments on March 31 (A$30m), June 30 (A$30m) and December 31 ($40m).