Victoria to monitor South Australia gambling tax
Victoria will monitor the new wagering tax in South Australia which has the potential to raise millions for both states, but impede corporate bookies.
The new tax which will impose a 15 per cent point of consumption charge on punter losses will be implemented in July in South Australia.
While a spokesman for Treasurer Tim Pallas said the Victorian government had no imminent plans to implement the tax, there are reports the impact on South Australia’s budget and gambling sector will be monitored closely.
A Credit Suisse analysis of the tax scheme on one of Australia’s biggest gambling giants, Tabcorp, in Victoria revealed around $150 million could be raised for the state if implemented.
It’s estimated around $30 million in revenue could be raised in South Australia, with this situation of undoubted interest to the Andrews’ government who were forced into spending cuts at the most recent state budget.
This comes after public campaigns against the tax from prominent online bookmakers, including Sportsbet. The online bookie fought back suggesting the tax will create worse odds for punters, and be counter-productive as punters seek a better go at offshore websites.
For the time being, Tabcorp along with Tatts Group and WA racing pay almost 100 per cent of wagering taxes in Australia, aggregating to about $289 million. This coincides with their 71 per cent market share.
Tabcorp chief executive, David Attenborough, applauds the tax model and advised shareholders his company would encourage “other state and territory governments to consider similar models”.
“We support the South Australian government’s point of consumption tax and it has the potential to enhance the sustainability of the racing industry in the long term, as well as capture additional revenue for government,” he said.
Despite this position, corporate bookmakers believe they will lose punters. Seven West Media chief executive, Tim Worner, agreed, telling the Australian Financial Review late last year this was a worrying trend which other states were considering.
“The point of consumption tax is another example of Australian businesses, who pay tax and play by the rules set here, being disadvantaged against unregulated foreign service providers,” he said.
“The end result will be that consumers will move to unregulated providers and this cannot be in the best interests of consumers.”
The Credit Suisse analysis states if the tax regime went global “it would just about wipe out all bookmakers’ EBITDA (earnings before interest, taxation, depreciation and amortisation) in Australia.”
The analysis also revealed the results of the point of consumption tax in the UK in 2014, where a reduction in profits for some bookies was incurred but it didn’t send the companies into a critical position. But UK corporate bookies don’t pay product fees on the sport markets offered, unlike Australia.
The tax does pose some legal challenges too, since the majority of the corporate bookies are based in the Northern Territory and some have argued the definition of the point of consumption.
Our take – will Australian bookies be disadvantaged?
In November we detailed our thoughts on the new gambling tax proposed for South Australia stating the main purpose behind it is the money raised for the government. Only 5.4% of the money raised will go to problem gamblers – one of the reasons the government stated for imposing the tax – which is a joke.
We do see Victoria following in South Australia’s footsteps if the revenue incurred lives up the revenue estimations, and while we agree there should be an Australian-wide standard, we aren’t so sure that this should be it.
This move targets betting companies, but instead of focusing on where the bookie is located, it targets where the bets are placed. While Tabcorp thinks this will create a level playing field, we can’t help but agree with Sportsbet and other bookies based in Australia – punters will look to offshore sites with better odds instead of sticking here or opting for Tabcorp markets.
