The New South Wales government is reportedly mulling over the option of renegotiating the planned gambling tax hike, which would impose a tax rate of 60.67% on casino gaming profits starting from July 1. This consideration comes as Star Entertainment, a prominent casino operator in the state, faces financial challenges.
In light of The Star Entertainment Group‘s recent announcement of laying off 500 employees and freezing wages due to financial difficulties, the New South Wales government is reportedly considering a renegotiation of the planned gaming tax hike. The tax increase, aimed at generating an additional AU$364 million (US$244.2 million) over three years, is now causing concerns for Premier Chris Minns who fears potential social conflicts arising from the financial burden on the gaming industry.
As a part of policy alignment with arrangements previously announced in Victoria, the New South Wales government had earlier revealed plans to implement increased taxes on poker machines and gambling tables at The Star and Crown Sydney casinos. However, starting from July 1, the proposed tax hike would see casino gaming profits being taxed at a significantly higher rate of 60.67 percent, as compared to the current rate of 31.57 percent.
In the past few years, both The Star and its rival Crown Resorts have faced heightened scrutiny due to damaging revelations from inquiries that exposed their operations for enabling money laundering. These revelations have resulted in increased regulatory scrutiny and public backlash, creating an uncomfortable financial situation for both giants in the gaming industry. Moreover, the ongoing crisis triggered by the Covid-19 pandemic has further compounded their financial challenges, as the gaming industry has been severely impacted by restrictions, closures, and reduced customer demand, adding to the financial strain faced by these operators.
Crown Resorts recently announced a substantial loss of AU$945.4 million (US$632.18 million) for the full-year 2022, reflecting the financial challenges faced by the company. Furthermore, the earnings before interest, tax, depreciation, and amortization (EBITDA) for 2022 were negative, amounting to AU$699.6 million, indicating a significant financial setback for the company during the reported period. These financial results highlight the ongoing struggles faced by Crown Resorts, which has been impacted by various factors including the damaging inquiries and the adverse effects of the Covid-19 pandemic on the gaming industry.