Star Entertainment, Crown Resorts to Pay More in New Gaming Tax

Posted on: November 21, 2023, 06:43h. 

Last updated on: November 21, 2023, 12:23h.

Erik Gibbs Read More
Expertise: Asia Pacific Gaming, Gaming Business, Global Gaming.

Casino operators in New South Wales (NSW), Australia, aren’t going to be able to avoid paying more taxes. Star Entertainment and Crown Resorts may have been able to convince the state government to go easy on them. But a new tax deal signed on Monday night will bring about changes.

The Star sign outside the Star Entertainment casino in NSW
The Star sign outside the Star Entertainment casino in NSW. The state is moving forward with new tax regimes for its casinos. (Image: The Australian)

In a press release issued Monday night, Treasurer Daniel Mookhey announced that Star Sydney and Crown Sydney, both situated in NSW, have consented to revised tax arrangements. The agreements outline several key changes affecting the casinos.

The tax rates for The Star and Crown will see an increase, retroactively effective from July 1, 2023. Additionally, while Crown already knew it wasn’t going to be able to negotiate a new deal, The Star will be subject to a transitional tax on slot machines until a new tax kicks in on July 1, 2030.

Star Employees Earn Protections

Star will pay the 20.91% tax rate on slots it currently pays until the end of the fiscal year. After that, as of July 1 of next year, the rate increases to 21.91%, and then to 22.91% three years later.

Starting on July 1, 2030, NSW will introduce a sliding scale for the tax rate. It will jump to 37.6% for average slot revenue of AU$2,666 (US$1,737) per machine, and increase to 42.1% if the revenue tops AU$6,667 (US$4,345). If it goes above AU$12,500 (US$8,145), the rate is 51.6%.

Star, considering the retroactive aspect of the tax rate, now has to pay 20.25% on table game revenue. That is an increase of almost 3% from the 17.91% it previously paid.  In addition, it must pay 35% of all gaming revenue if the Star Sydney casino makes anything over AU$1.125 billion (US$733 million) a year.

These adjustments come with a safeguard for the employment of thousands of workers at The Star. The NSW government is set to introduce legislation Tuesday aimed at establishing worker protection at The Star. This initiative, the details of which are yet to be released, will secure the livelihoods of more than 3,000 workers for the next six years.

Following consultations by the Minns Labor government,  The Star and Crown have now agreed to adhere to the heightened tax obligations. This will likely further impact the operators’ bottom lines, as the taxes are independent of recent point of consumption tax changes.

Winning a Lifeline

The backdrop to these changes involves the casino tax increases, initially proposed by the former government in December 2022 without prior consultation with either Star or Crown. Although the increases weren’t initially legislated, they eventually found a place in the NSW budget.

The previous government believed a spontaneous tax increase would yield as much as AU$350 million (US$230 million) in new revenue to the state over three years. However, because it never discussed the plans with casino operators, NSW leaders never considered the ramifications.

Star, which, like Crown, is still paying off fines it incurred for violating gaming regulations, said the proposed tax increases would cost it millions of dollars. They would also possibly force it to close some of its operations.

Mookhey put a stop to the changes when he arrived in favor of discussing the tax rate with Star and Crown. He rightfully pointed out that shuttered businesses don’t pay taxes.