Star Entertainment Group, an Australian-based gambling and entertainment company, revealed on November 21st filling that it has officially entered into a binding contract with the New South Wales government on the casino duty rates it will have to pay during the period of the upcoming 7 years.
The aforementioned Star and the NSW government formerly signed an in-principle contract during August of this year. However, the current binding contract offers better security for the future. This contract came to fruition, following a proposal by the previous government which included a huge increase in the duties levied on electronic gaming machines at the Star Sydney to over 60% of average poker machine income.
Speaking of which, while describing the proposal that was submitted without prior discussion with The Star, the company commented: “The proposal is not sustainable and flawed in its design.” It also claimed that “if implemented as originally proposed would significantly challenge the economic viability of The Star’s Sydney business putting the jobs of thousands of NSW team members in jeopardy.”
However, commenting on the binding contract on the morning of November 21, Robbie Cooke, CEO and Managing Director of The Star, commented, according to Inside Asian Gaming: “The Star appreciates the constructive engagement on this process with the current NSW Government. The formalization of these arrangements protects our Sydney team’s jobs and enables us to continue the important ongoing work required to restore The Star Sydney to suitability, and to earn back the trust of our stakeholders.”
Formalizing NSW casino duty rates:
Furthermore, as reported by The Market Herald, the aforementioned binding contract keeps the ongoing 20.91% tax the firm is required to pay on poker machines, net of VAT, till the end of the financial year 2023. Additionally, the tax will increase to 21.91% from July 1 next year and to 22.91% from July 1st 2027. However, staring on July 1, 2030, the tax will officially be paid on an increasing scale, beginning at 37.6% for income from average poker machines exceeding AU$2,666, which is approximately US$1,737, increasing to 42.1% for over AU$6,667, which is approximately US$4.345, and to 51.6% for over AU$12.500, which is approximately US$8.145.
But the firm may during that time to ask for a “good faith“ consideration of the duty rate for poker machines and/or connected thresholds founded on the trading circumstances and EBIT for the Sydney casino in the time frame from July 1 of this year to June 30, 2030.
Other modifications that came into effect on July 1 of this year involve a growth in the customs duty on table games from 17.91% to 20.25% and on refund play from 10.0% to 12.5%. Additionally, an extra tax equivalent to 35% will be applied on any Star Sydney gaming income above $1.125 billion, which is approximately US$733 million, for every FY. In this regard, Star formerly said: “We expect the new duty rates to cost an additional AU$10 million (US$6.5 million) in 2024.”