Australia’s Star Entertainment Group has officially sealed a binding agreement with the New South Wales (NSW) state government concerning casino duty rates for the next seven years. The formalization of this agreement follows an in-principle understanding reached in August, providing enhanced certainty for both parties. The negotiations stemmed from concerns over proposed significant increases in duties on electronic gaming machines at the Sydney casino, a move that Star had deemed unsustainable and potentially detrimental to its Sydney business.
Details of the Binding Agreement:
The binding agreement maintains the current tax rate of 20.91% on poker machines (excluding GST) until the end of the current financial year. Starting from July 1, 2024, the tax will incrementally rise to 21.91% and further to 22.91% from July 1, 2027. From July 1, 2030, a graduated scale will be implemented, beginning at 37.6% for average poker machine revenues exceeding AU$2,666 (US$1,737), escalating to 42.1% for revenues over AU$6,667 (US$4,345), and reaching 51.6% for revenues surpassing AU$12,500 (US$8,145).
Notably, Star Entertainment Group has the option to request a good-faith review of the poker machine duty rate and associated thresholds in 2030 based on trading conditions and EBIT for The Star Sydney between July 1, 2023, and June 30, 2030.
Additional Changes and Financial Implications:
Effective from July 1, 2023, other changes include an increase in the duty rate on rebate play from 10.0% to 12.5% and on table games from 17.91% to 20.25%. An additional levy, equivalent to 35% of all Star Sydney gaming revenue exceeding $1.125 billion (US$733 million) annually, will also be implemented.
Star Entertainment Group anticipates that the new duty rates will result in an additional cost of AU$10 million (US$6.5 million) in 2024.
CEO’s Perspective:
Commenting on the binding agreement, Star’s Managing Director and CEO Robbie Cooke expressed appreciation for the constructive engagement with the NSW Government. He emphasized that formalizing these arrangements safeguards jobs, allowing the company to focus on restoring The Star Sydney’s suitability and rebuilding stakeholder trust.
The finalized agreement on casino duty rates provides clarity and stability for Star Entertainment Group in its operations at The Star Sydney. The carefully structured tax increments and the option for a future review demonstrate a collaborative approach between the company and the NSW government. As Star charts its path forward, the agreement lays the groundwork for sustained growth and economic viability in the dynamic landscape of Australia’s gaming industry.