Australia’s Star Entertainment Group has been granted a temporary reprieve after the NSW state government revealed it will delay any potential implementation of an increase in casino tax rates until after an upcoming recess of parliament.
In a ministerial statement, NSW Treasurer Daniel Moohkey said that the government has been in discussions with Sydney’s casinos – The Star Sydney and Crown Sydney – over implementation of the tax hike but that, “to permit these conversations to continue, the Government plans to pursue the legislation following the forthcoming Parliamentary winter recess.”
As reported by Inside Asian Gaming, the increase – initially scheduled for implementation from 1 July 2023 – would see the tax levied on electronic gaming machines increased from a flat rate of 32% to more than 60% – putting it well above the 37.5% rate paid by NSW clubs. Although marketed as a tax on NSW casinos, Star’s Sydney rival Crown Sydney does not have any poker machines meaning the EGM tax is essentially a tax on The Star Sydney alone.
In his statement, Moohkey noted that the casino tax hike had been initially announced by the former government in December 2022. Although the increase was not legislated, the measure was written into the budget and was inherited by the current government as a legacy policy upon its election in March.
The issue has, however, become a point of contention for Moohkey with The Star Sydney already facing what it has described as “significant deterioration of operating conditions” and recently announcing 500 redundancies. Star has warned of further staff cuts should the tax hike become reality.
In an ASX filing on Tuesday, Star doubled down on those threats, describing the proposes increase as “not sustainable” and “flawed in design”.
“This proposed duty increase was policy on the run by the former Treasurer, was ill-conceived with no consultation and had no regard to the capacity of our Sydney operation to afford the impost,” said Star’s CEO and Managing Director Robbie Cooke.
“If implemented as originally proposed, the additional duty would significantly challenge the economic viability of the Sydney business and put the jobs of up to 4,000 hard working Sydney employees in jeopardy.
“We will continue to engage with the new NSW Government to guarantee the jobs of our team members while working hard to implement the significant reforms required to restore The Star to suitability and to ensure it remains a valuable contributor to the NSW economy.”
Star added that ongoing uncertainty and the prospect of increased casino duties were increasing the risk of the company being unable to successfully refinance its existing debt facilities and separately increase covenant headroom.