Queensland tax reform makes Tabcorp more competitive

A sweeping reform of the tax code applied to sportsbooks has come to fruition in Queensland and it may be uncharacteristic, but at least one bookmaker is cheering. This is Tabcorp and chief executive Adam Rytenskild has already praised the government’s efforts to reform the tax code so that a more level playfield may be introduced.

For years, Rytenskild argued, Tabcorp has been competing against rival bookmakers at a significant disadvantage. The new reform is finally changing that and delivering the embattled giant with a revenue boost. The news was so good that Tabcorp’s share went up 5% on Monday alone.

The new taxation regiment proposes that the consumption tax will change to 20% from 15% presently. The industry will be cutting a bigger share of this tax moving forward, but how can this be? Essentially, a point of consumption tax is a levy applied to operators when they process a customer’s bet. The tax is sent to the state as it should be and then redistributed to the racing industry through grants.

But Tabcorp stands to benefit from this new arrangement. The company’s hands will be unshackled as it will no longer have to cover agreements with the state racing body but direct the tax to the state. This way, Tabcorp would be paying less, but then again, the money it pays will be directed to the racing industry after.

Tabcorp has won the fight in Queensland, but the company wants to see similar changes enacted in both New SouthWales and Victoria – something that will take time. But good news is still good news. Tabcorp is feeling lucky that it can finally start taking on Ladbrokes and Sportsbet who have not been pressured by the tax regime and have had the opportunity to invest better into developing more enticing products.

This is not the only big win for Tabcorp. The company confirmed that it will cover an outstanding $150m of unpaid point of consumption taxes as a way to close the chapter with the whole tax saga. Tabcorp may even want to try and start catching up to its lottery division, the Lottery Corporation, which completed a demerger from the sports betting operations in May, as it was better for business to run the profitable lottery segment separate from the somewhat struggling sports betting platform and operations.

Rytenskild still said in public that while the Queensland win was important to the company and enabled it to compete on a level playfield, New South Wales and Victoria are both bigger and more crucial to the company. Lobbying for these changes is hard, Rytenskild would admit, but the good news is that there is already a precedent, and this is what could influence policies in other states as well.

With the Victoria license up for renewal in 2024, Tabcorp may have some options, depending on how keen the state is to retain Tabcorp as an operator. But nobody really knows what may happen until then – an overhaul of the taxes may indeed arrive by the time Tabcorp’s sports betting operations are seeking renewal.

Meanwhile, the tax reform will also make sure that the racing industry gets a more substantial chunk of the revenue, guaranteeing its long-term sustainability.

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