The Star Entertainment Group, an Australian gambling and entertainment company, announced on November 21st that it has officially signed a binding contract with the New South Wales government regarding the casino duty rates it will pay over the next 7 years.
This follows the initial in-principle contract that was signed in August of this year. The binding contract provides better security for the future of the company. The contract came after a proposal by the previous government that included a significant increase in duties on electronic gaming machines at the Star Sydney, to over 60% of the average poker machine income.
The company criticized this proposal, stating that it was not sustainable and flawed in its design. They argued that if implemented as originally proposed, it would significantly challenge the economic viability of The Star’s Sydney business and put the jobs of thousands of team members in jeopardy.
However, Robbie Cooke, CEO and Managing Director of The Star, expressed appreciation for the constructive engagement with the current NSW Government and commented that the formalization of the arrangements protects the jobs of their Sydney team and enables them to continue the ongoing work required to restore The Star Sydney to suitability and earn back the trust of stakeholders.
The binding contract formalizes the ongoing 20.91% tax on poker machines until the end of the financial year 2023. There will be subsequent increases to 21.91% from July 2024, and to 22.91% from July 2027. From July 2030 onwards, the tax will be paid on an increasing scale, ranging from 37.6% to 51.6%, depending on the income from average poker machines.
The firm also has the option to request a “good faith” consideration of the duty rate for poker machines based on trading circumstances and EBIT for the Sydney casino from July 1, 2023, to June 30, 2030.
Other modifications that came into effect on July 1, 2023, include an increase in the customs duty on table games and refund play. Additionally, an extra tax equivalent to 35% will be applied to any Star Sydney gaming income above $1.125 billion for every fiscal year, costing the company an additional AU$10 million in 2024.