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NSW government finalises increased casino tax rates

| By Robert Fletcher
The New South Wales (NSW) government has confirmed a number of tax increases for land-based casinos in the Australian state.
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Plans for higher casino tax rates in NSW have been mooted for some time. The existing government set out proposals in December 2022, with the aim of these coming into effect in July 2023.

Increases were written into the budget and inherited by the current government as a legacy policy upon election in March. The new administration then issued an update in June saying it intended to push ahead with the plans

At the time it did not confirm the rates but did confirm it would hold talks with casinos over the matter. This came following criticism from some casino operators, including Star Entertainment, over the approach to increasing tax rates.

The government reached an agreement in principle over a shorter increase in rates in the summer. These rates have now been confirmed by the government and are deemed effective from 1 July this year.

What tax rate will casino operators face?

Rebate play rate increases from 10.0% to 12.5% and non-rebate play on table games will rise from 17.91% to 20.25%. Both rates are in line with proposals put forward by the existing government.

Non-rebate rates for poker machines (pokies) will remain unchanged for the time being at 20.91%. However, this will increase to 21.91% from 1 July 2024, and then 22.91% from 1 July 2027.

From 30 June 2030, the rate will switch to a tiered system. Again, this is line with what was suggested by the previous government.

Tax will not be payable for machines with an average poker machine revenue (AMPR) under AU$2,666 (£1,398/€1,601/US$1754). Machines making between $2,666 to $6,667 will be taxed at a rate of 37.6%. A rate of 42.1% will be applied to machines in the range of $6,667 to $12,500, then 51.6% for machines with an AMPR above this threshold. 

Pokies rates and thresholds may be subject to a good faith review between 1 July 2030 and 30 September 2030. This can be requested by casino operators.

The government also confirmed there will be no change to the current responsible gambling levy. This will stay set at a rate of 2%.

In addition, Star has agreed to pay an additional levy. This is equal to 35% of Star Sydney’s gaming revenue above $1.13bn for each financial year, running from 1 July 2023 to 30 June 2030.

Star welcomes new tax rates in NSW

Star CEO and managing director Robbie Cooke responded positively to the news of higher rates. The operator held talks with the government over the matter and agreed the initial rates back in August, with Cooke saying this would help protect jobs.

“The Star appreciates the constructive engagement on this process with the current NSW government,” Cooke said. “The formalisation 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.”

Star has faced a challenging period in NSW. In April, Star announced it would begin cost and restructuring initiatives due to a “significant” and “rapid” deterioration in operating conditions in NSW.

The operator has been the target of multiple parliamentary inquiries into misconduct. In relation to this, Star has committed to further engagement with the NSW government to formalise certain arrangements.

These in-principle agreements include a cashless and carded play trial. This is a precursor to reforms to the NSW regulatory framework that will see cashless gaming and carded play introduced to casinos in the state from August 2024. 

In addition, the Star referenced an in-principle commitment regarding jobs in NSW. This will see it maintain headcount in the state at specified levels, subject to permitted adjustments and force majeure and material change events.

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