Australian casino operator The Star says that it has reached an agreement with authorities in the state of New South Wales over proposed tax increases which affect pokies and table games as well as an additional gaming on all Star Sydney gaming revenue above a certain threshold.
When first announced, The Star’s management said that the changes – effective July 1st – would cost it some $1.11 billion, alongside other possible fines and ongoing legal woes its facing.
In the wake of the announced tax changes, the Australian gaming group also stated that it was laying off some 500 full-time staff and freezing salaries in order to reduce costs amongst what it called a ‘rapid deterioration in operating conditions’.
According to the group’s CEO, Robbie Cooke, the in-principle agreement “protects our Sydney team’s jobs and the viability of The Star Sydney”.
The Star’s CEO had previously said that the as-proposed levies 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”.
The CEO and Managing Director also called the agreement “a sustainable path forward” -with the expected duty payable for FY24 at “circa AU$10 million ($6.5 million)”.
The measure “is also designed to provide employment certainty for team members” – under arrangements with the United Workers Union.
It also will allow for the introduction, in October, of a trial run of its cashless gaming machine tech. The trial will include 50 gaming machines and eight gaming tables, notes the CEO.
The new levies (effective from July 1st of this year) encompass the following:
- A duty rate increase on rebate play from 10 percent to 12.5 percent
- A duty rate increase on table games non-rebate play from 17.91 percent to 20.25 percent
The group notes that the current pokie machine duty rates, under the agreement, will continue unchanged:
- 20.91 percent (excluding GST) until July 1st 2024, after which it increases by 1 percent each following three-year-period (in 2024 and in 2027).
After 2030 the rates will be the following (excluding GST):
- 0 percent on average poker machine revenue (APMR) below AU$2,666
- 37.6 percent on figures between AU$2,666 and AU$6,667
- 42.1 percent on figures between AU$6,667 and AU$12,500
- 51.6 percent on all figures above AU$12,500
An additional levy of 35 percent is to be applied between July 1st of this year and 30th of June of 2030, totaling 35 percent of all Star Sydney gaming revenue above AU$1.125 billion ($731.36 million) per financial year.
There will be no change to the responsible gaming levy of 2 percent that the group currently pays.
New agreement allows for continued refinancing
The Star’s CEO notes that the new agreement will allow for the company to attempt to pull itself out of its financial difficulties and continue its pursuit of compliance, noting “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”.