Star Entertainment Group issued an announcement on the Australian Stock Exchange Monday, seeking to urgently engage with the New South Wales Government after NSW Treasurer Matt Kean announced a potential reform to the NSW casino tax regime.
The treasurer’s announcement stated that two Sydney casinos would be paying over $300m more in annual taxes on poker machines (slots) and gaming tables.
Star stocks (ASX code: SGR) were down about 15% on the news.
The treasurer intends to increase taxes on Star’s casino in Pyrmont and the Crown Sydney, which has no poker machines, enough to raise $364m in order to take care of pandemic-affected communities and those hit hardest by floods and wildfires.
Clubs NSW maintains that the big casinos don’t pay the same amount of taxes on their machines as the local clubs and hotels do.
The clubs have been at the forefront of opposition to Premier Dominic Perrottet in his quest to make all gambling machines in the state “cashless” in order to stem the tide of money laundering that is believed to occur through the devices.
Remediation to Regain Community Trust
The closing statement in The Stars’ ASX announcement included, “The Star seeks to fast track cashless gaming and carded play to deliver safer gambling, whilst also continuing on a remediation path to return to suitability and earn back the trust of the community.”
Kean said about gaming machine taxes: “It’s important that casinos pay their fair share of tax. These reformed tax rates will replace the existing regime under which casinos pay less tax on poker machines than hotels and clubs.”
Kean’s announcement would seem to have blindsided Star executives who earlier this month were given 12 months to “get their house in order” to avoid a levied license suspension and were ordered to pay a $100m fine for anti-money laundering failures in the past and a lack of urgency in remedying its practices and controls.
The Star’s CEO and Managing Director Robbie Cooke noted that when all tax regimes are taken into account, as much as 80% of Star profits are handed over in the form of taxes.
Cooke said: “We are not sure how the Government modeled its financials nor the basis for suggesting The Star does not pay its fair share of taxes.
“Specifically, in addition to state gaming taxes, The Star also pays millions in corporate taxes, with total taxes paid as a percentage of The Star’s profits being around 70%, and as high as 80% in the last 5 years when all the tax regimes are considered.”
New Tax Rate for July 2023
According to The SMH, the government proposes a top tax rate on poker machines of 60.67% with the new regime going into effect in July 2023. That rate would bring the state’s pokie tax rate in line with a new rate announced in Victoria’s state budget that exceeds the percentage paid by clubs and hotels.
Monday’s drop in share prices brought the already battered stock down nearly 40% over the last year, adding to an earlier sustained skid of about 25% in the face of and aftermath of the Bell inquiry that found systemic problems with the compliance culture of the casino giant.
A previous tax agreement struck in 2020 but abandoned by the government after Star had its license suspended with a 12-month delay in effect would have saved the operator over $1b in taxes through 2041.
According to the Sydney Morning Herald, Rival operator Crown Resorts’ spokesperson said: “The impact of these changes will depend on the final details of the tax and other pre-existing arrangements we have in place at Crown Sydney.”
Crown Sydney has guaranteed the government at least $1b in taxes over its first 15 years of operations.
Source: Star share price plummets following NSW casino tax increase proposal, The Sydney Morning Herald, December 19, 2022
The post Star Entertainment Stocks Slide on News of NSW Tax Scheme appeared first on Casino News Daily.
Source link