Comparing Current vs. Intended Tax Rates for NSW Casinos
The New South Wales (NSW) government has recently announced its intention to increase the tax rates applied to the two land-based casinos in Sydney: The Star and Crown. The proposed changes are expected to raise an additional $364 million over the next three years, starting from July 2023. The government said the increased revenue would help fund vital services and ensure the casinos pay their fair share of tax.
But what exactly are the current and intended tax rates for the casinos, and how do they compare to other gambling venues in NSW and other states? And what are the potential impacts of the tax reform on the casino industry and the broader economy? This blog post will answer these questions and provide some background information.
Current Tax Rates for Casinos In NSW
Casinos in NSW are subject to different tax rates depending on the type of gambling activity they offer. According to the NSW Treasury, the current tax rates for casinos are as follows:
– Non-rebate duty rate: 17.91% of gross gaming revenue (GGR) from table games (excluding poker machines). This rate applies to all casino customers except those who are part of a rebate program, which offers incentives to high rollers.
- Rebate duty rate: 10% of GGR from table games for rebate customers.
- Poker machine duty rate:91% of net revenue from poker machines.
- Responsible gambling levy: 2% of GGR from all gambling activities.
These tax rates are specified in the duty and responsible gambling levy agreements between the casinos and the NSW government, signed in 2014 for The Star and in 2019 for Crown. The agreements also include minimum tax payments, licence fees, exclusivity arrangements, and social responsibility measures.
Intended Tax Rates for Casinos In NSW
On 17 December 2022, the NSW government announced its plan to reform the tax rates for casinos, saying that they currently pay less tax than hotels and clubs that offer poker machines. The intended changes are as follows:
- Non-rebate duty rate: increase from 17.91% to 20.25% of GGR from table games (excluding poker machines) for non-rebate customers.
- Rebate duty rate: increase from 10% to 12.5% of GGR from table games for rebate customers.
- Poker machine duty rate: change from a flat rate of 20.91% to a tiered schedule based on monthly net revenue per gaming machine:
| Monthly Net Revenue (Applied per gaming machine) | Duty Rate |
| Less than $2,666 | 0% |
| $2,666 or more and less than $6,667 | 46.7% |
| $6,667 or more and less than $12,500 | 51.17% |
| $12,500 or more | 60.67% |
- Responsible gambling levy: remain at 2% of GGR from all gambling activities.
The government said that these changes would bring the tax rates for casinos in line with those for clubs and pubs, which pay up to 46.7% of net revenue from poker machines. The new tax rates are expected to start on 1 July 2023 and are forecast to raise an additional $364 million over three years.
Comparison With Other Gambling Venues and States
How do the current and intended tax rates for casinos in NSW compare to other gambling venues in the state and other states in Australia? According to a report by Liquor & Gaming NSW, the average effective tax rate for clubs and hotels that offer poker machines in NSW was 36.1% in 2019-20, while the average effective tax rate for The Star casino was 28%. The report also showed that NSW had the second-lowest effective tax rate for casinos among all states and territories after Queensland.
The following table shows a comparison of the current and intended effective tax rates for casinos in NSW with those in other states and territories, based on data from Liquor & Gaming NSW and various government sources:
| State/Territory | Current Effective Tax Rate (%) | Intended Effective Tax Rate (%) |
| NSW | 28 | 34 |
| VIC | 31 | 31 |
| QLD | 27 | 27 |
| SA | 41 | 41 |
| WA | N/A | N/A |
| TAS | 25 | 25 |
| ACT | 33 | 33 |
| NT | 30 | 30 |
Note: The effective tax rate is calculated as the total tax paid by the casino divided by its total GGR. NSW’s intended effective tax rate is based on the government’s estimate of the additional revenue from the tax reform. WA does not have any land-based casinos.
Potential Impacts of The Tax Reform
The NSW government aims for casinos to contribute appropriately to the community, support vital services amid the pandemic and disasters. They assure the tax reform won’t impact the industry’s viability as a major employer and tourism attraction.
However, the casino industry has expressed concerns about the impact of the tax reform on its profitability and competitiveness. The Star Entertainment Group, which operates The Star casino, said it was disappointed by the government’s decision and would review its investment plans in NSW. Crown Resorts, which operates Crown Sydney, said it was surprised by the announcement and would seek further clarification from the government.
The casino industry argues tax reform creates an uneven playing field, discourages international high rollers, and affects their contributions to the economy through employment, tourism, entertainment, and community programs.
The tax reform sparked a debate among experts and advocates. Views vary on benefits and drawbacks. Some support it for reducing harm and promoting responsible gambling, while others question effectiveness and fairness. Some suggest using additional revenue for prevention and treatment services.
Conclusion
The NSW government’s decision to raise taxes on casinos is a significant policy change that will have implications for the casino industry, the gambling sector, and the state economy. Therefore, the government said the tax reform would generate more revenue for essential services and ensure that the casinos pay their fair share of tax. The casino industry said the tax reform would hurt its profitability and competitiveness and create an uneven playing field. The tax reform has also generated diverse opinions among gambling experts and advocates, who have different perspectives on its potential impacts on gambling harm and responsible gambling.
The tax reform is expected to start on 1 July 2023, but it may face some challenges and uncertainties. The government said it would proceed with its plans and consult with stakeholders on the implementation. The casino industry said it would seek more clarification and review its options. The tax reform may also be subject to legal or political changes, depending on the outcome of the upcoming state election in March 2023.
As a result, it is important for anyone interested or affected by this issue to stay informed and engaged with the latest developments and discussions. This blog post has provided some background information and analysis on the issue, but there may be more updates and insights in the future.
