Crown Resorts says it is seeking clarification from the Victorian state government over a plan to increase the tax rate on EGMs at Crown Melbourne.
The plan was first unveiled last week, with the government stating the new tax regime would generate up to AU$30 million (US$21.3 million) a year and subject Crown to the same tax rates as those operated by not-for-profit, community-based venues such as RSLs.
Crown currently pays a flat 31.57% tax rate on machine revenue plus a 1% community levy on top, but this would change to a sliding scale with progressive tax brackets under the new model. The new marginal tax rate would see Crown’s EGMs taxed at 46.7% should average monthly machine revenue fall between AU$2,666 and AU$6,667 (US$1,890 and US$4,727), moving to 51.7% if between AU$6,667 and AU$12,500 (US$4,727 and US$8,863) and to 60.67% if average monthly machine revenue tops AU$12,500.
In an ASX filing this week, Crown said it has held discussions with the Government since the announcement was released seeking to clarify aspects of the proposal.
“Based on those discussions, Crown estimates that if the proposed arrangements were in place during FY2019 (being the last financial year prior to COVID-19), the impact on the earnings of Crown Melbourne would have been approximately AU$35 million to AU$40 million (US$24.8 million to US$28.3 million).
“The actual impact of the proposed arrangements on future earnings will depend on various matters including the final details of the proposed arrangements and the revenue generated from electronic gaming machines at Crown Melbourne.
“Noting the Government is committed to the implementation of this measure, the Government and Crown intend to establish a working group to further consider the implications for Crown and the process for implementing the changes proposed by the Government, which will require legislation.”
The proposed changes come after a Royal Commission last year found Crown unsuitable to retain its Victorian casino license but gave the company two years to attempt to return to suitability, under the watch of a Special Manager.