NSW debates tax hike backed by an operator

Tail risks are never the exception in the Australian gambling industry, with the government of New South Wales (NSW) now seriously debating the possibility of increasing the tax rate for sports wagering.

New sports betting tax increased headed for NSW

Interestingly, the hike initiative comes with the blessing of one of the state’s own sports betting companies, Tabcorp, which has already established a solid beachhead in the jurisdiction and can deal with a point of consumption tax (POCT) increase, but also pointing out that Queensland and Victoria have also acted in a similar way.

The POCT is a fairly new way to approach and deal with sports gambling in general, first introduced in 2019, and now possibly being adjusted to 20% from its current rate of 15%.

In certain sense, this would align the state with POCT taxation elsewhere, but it is also a rather quick follow-up increase from 2022 when the levy was raised from its original 10%.

Introducing a higher tax is not meant to hurt the industry, assures NSW Treasurer Daniel Mookhey who spoke to the Sydney Morning Herald, a local media outfit. Rather, the measure is designed to ensure that gambling companies are doing their fair bit.

The goal of the POCT is to guarantee this fairness, as the tax simply means that sports betting operators must pay tax in the states where a bet has been placed rather than the states where they are headquartered.

This way, a bookmaker registered in a state with lower tax rates but collecting the bulk of its revenue elsewhere would not be able to ignore contributing locally. Mookhey has said that the government is taking a closer look the proposals pitched by Tabcorp.

Beware the wolf in sports betting skin

"The NSW government will apply strict scrutiny to Tabcorp’s proposal. Change will happen if it’s clear the public will be better off," he added, indicating that the final word would ultimately rest with the government.

Of course, not everyone is pleased, and Tabcorp’s role as a proselytizer of tax hikes has been assailed by Sportsbet CEO Barni Evans who said that the sustainability of the industry should not be prioritized over a single stakeholder. Evans noted that his team and he remained open to discussion.

Tabcorp though believes that just the opposite would be true, as it would force rivals’ hands to play on a fairer ground with local operators. If implemented, Tabcorp mused in an official statement, the tax hike would create a "level playing field and modernize retail exclusivity, similar to reforms in Queensland and Victoria."

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