Australia’s Star Entertainment Group said in a Tuesday morning filing that it has signed a binding agreement with the NSW state government in regard to the casino duty rates it will pay over the next seven years.
The two parties had previously entered into an in-principle agreement in August but the binding agreement provide for greater certainty moving forward.
It comes after 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.”
Commenting on the binding agreement this morning, Star Managing Director and CEO Robbie Cooke said, “The Star appreciates the constructive engagement on this process with the current NSW Government. The formalization of these arrangements protects our Sydney team’s jobs and enables us to continue the important ongoing work required to restore The Star Sydney to suitability, and to earn back the trust of our stakeholders.”
The binding agreement maintains the current 20.91% tax Star 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 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.
Star previously said it expects the new duty rates to cost an additional AU$10 million (US$6.5 million) in 2024.
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