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The Star Sydney reaches agreement on casino duty rate hikes, expects annual impact of AU$10 million

Ben Blaschke by Ben Blaschke
Fri 11 Aug 2023 at 08:41
10 Years Ago: The Star war

The Star Sydney

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Australia’s Star Entertainment Group has reached an agreement with the NSW state government that will see increases to casino duty rates at The Star Sydney kept to what the casino operator calls “sustainable” levels.

As reported by Inside Asian Gaming, the previous state government had proposed a massive increase to the duties charged on electronic gaming machines at the Sydney casino to more than 60% of average poker machine revenue. Star had described the proposal – put forward without consultation with Star – as “not sustainable and flawed in its design”, arguing that if implemented as originally proposed would “significantly challenge the economic viability of The Star’s Sydney business putting the jobs of thousands of NSW team members in jeopardy.”

Instead, Star released a statement early Friday confirming it has now reached an agreement with the recently elected Labor government for lower, phased increases to the duties it pays across the board.

This includes maintaining the current 20.91% tax it pays on poker machines, GST excluded, until the end of the current financial year. The tax will rise to 21.91% from 1 July 2024 and to 22.91% from 1 July 2027. From 1 July 2030, tax will be paid on a rising scale, starting at 37.6% for average poker machine revenues of more than AU$2,666 (US$1,737), rising to 42.1% for more than AU$6,667 (US$4,345) and to 51.6% for more than AU$12,500 (US$8,145).

However, Star may at that time request a good faith review of the poker machine duty rate and/or the associated thresholds based on trading conditions and EBIT for The Star Sydney in the period from 1 July 2023 to 30 June 2030.

Other changes effective as of 1 July 2023 and therefore already in play under the new agreement include an increase in the duty rate on rebate play from 10.0% to 12.5% and on table games from 17.91% to 20.25%.

An additional levy equal to 35% of all Star Sydney gaming revenue above $1.125 billion (US$733 million) for each financial year will also be applied.

“The formal consultative and structured approach implemented by the Government has enabled an in-principle agreement to be reached which protects our Sydney team’s jobs and the viability of The Star Sydney,” said Star’s CEO and Managing Director, Robbie Cooke.

“While the in-principle agreement will result in an uplift in duties payable to the State, it has due regard to the circumstances of our Sydney business and as such helps to create a sustainable path forward for The Star Sydney. The expected additional duty payable in FY24 is circa AU$10 million (US$6.5 million).

“It is also designed to provide employment certainty for team members in arrangements agreed with the United Workers Union. In addition, it will see The Star Sydney introduce a trial of its cashless gaming machine technology in October this year on 50 gaming machines and eight gaming tables.

“The arrangements enable us to continue working at pace to implement the significant reforms required to restore The Star Sydney to suitability, earn back the trust of the community, and ensure we remain a valuable contributor to the NSW economy.”

Star said the resolution of the NSW casino duty rates will also help facilitate its previously foreshadowed plans to refinance its existing debt funding arrangements, with more updates to come in the near future.

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Tags: Australiacasinoelectronic gaming machinesRobbie CookeStar Entertainment GrouptaxThe Star (Sydney)
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Ben Blaschke

Ben Blaschke

A former sports journalist in Sydney, Australia, Ben has been Managing Editor of Inside Asian Gaming since early 2016. He played a leading role in developing and launching IAG Breakfast Briefing in April 2017 and oversees as well as being a key contributor to all of IAG’s editorial pursuits.

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