Queensland Eyes Wagering Tax Hike Amid Entain Protest

June 6, 2022
Back
The Australian state of Queensland has proposed an increase in the point of consumption (POC) tax for wagering from 15 to 20 percent as part of a racing industry funding package that bypassed corporate bookmaker feedback.

Body

The Australian state of Queensland has proposed an increase in the point of consumption (POC) tax for wagering from 15 to 20 percent as part of a racing industry funding package that bypassed corporate bookmaker feedback.

A 5 percent “racing levy” will be added to the state’s 15 percent POC tax for wagering and will be extended to cover free bets and bonus bets, which were previously exempt, Queensland treasurer Cameron Dick and racing minister Grace Grace said in a statement on Monday (June 6).

The increase, due for implementation on December 1 as part of the state budget, would make Queensland’s POC tax rate the largest in Australia, with New South Wales and Victoria imposing 10 percent rates and other states and the Australian Capital Territory (ACT) imposing 15 percent.

The proportion of POC tax revenue channelled directly to the Queensland racing industry will also increase sharply from 35 percent to 80 percent, creating a “sustainable funding model” and “single funding stream” that will boost the rural racing industry in particular, the ministers said.

“At present, a lot of the funding that goes to the racing industry is in the form of short-term government funding programs,” Dick said.

“Now, the industry will have the certainty of knowing they will get 80 percent of the betting tax, and if the size of the pie grows, so too will their share.”

Dick described the reforms, which also terminate some monopoly entitlements enjoyed by Tabcorp Holdings, as “levelling the playing field for all wagering operators”.

“The significant growth in online betting over the last few years has led to a very different wagering market in Queensland and we need to adapt,” he said.

Tabcorp will retain on-course and retail betting monopolies, but control over on-course sponsorship and advertising will cease, meaning that Queensland’s 125 racing clubs “will have opportunities to enter into new sponsorship agreements with other wagering service providers”, Grace said, including for individual events and races.

In turn, corporate bookmakers will also contribute race field fees, the statement said.

However, Entain Australia, whose brands include Ladbrokes and Betstar, said it was not consulted over the changes and warned of damage to promotional products such as free bets.

“Entain is surprised and disappointed that a decision of this magnitude, which will have a direct and very real impact on our business, would be made without any consultation,” an Entain statement said on Monday.

“For this announcement to be made without even the courtesy of a phone call is staggering.

“Given the sudden nature of this announcement we will take time to review and understand the impacts on our business before responding in greater detail,” the statement said.

Racing Queensland, the state’s peak racing body, will make more announcements on prize money increases, infrastructure and funding arrangements prior to enactment of the state budget.

Monday’s announcement also marked the settling of state government legal action against Tabcorp over a POC tax dispute, with Tabcorp agreeing to transfer A$50m to the government for infrastructure investment and A$100m to Racing Queensland, conditional on implementation of the tax changes.

Tabcorp, which completed a demerger from its lotteries and keno business on June 1, has struggled with its wagering and media business for many years.

But Tabcorp management are happy with the Queensland deal, which will normalise fees and greatly reduce Tabcorp’s fee burden compared with corporate bookmakers that have enjoyed a surge in business in the pandemic era.

“Online betting has changed the market substantially since TAB’s licences were issued,” incoming Tabcorp managing director and CEO Adam Rytenskild said.

“On a relative basis, TAB currently pays double the fees to the local racing industries compared [with] other wagering operators.

“Going forward we will all pay the same in Queensland. I commend the Queensland Government for delivering fair and much needed reforms that bring the wagering market into line with the modern economy.”

A senior industry source who requested anonymity said the 20 percent tax rate is "out of step" with other states and territories and that Tabcorp comments on benefits for Queensland punters are "odd".

"I expect that large operators will move their marketing spend away from Queensland and focus on Victoria, New South Wales and other states and the ACT.

"In my view the decision by the Queensland government will only result in operators adjusting their marketing and also passing on the increase. Ultimately, Queensland punters will, I would expect, be worse off.

"The increase in POC tax receipts being returned to racing — from 35 percent to 80 percent — becomes less relevant if there is, as expected, a drop in wagering turnover from Queensland residents. A drop in turnover will also result in a decline in race field fees for the [racing] codes."

The POC tax on wagering was pioneered in 2016 by the South Australia state government, which sought to recover funds channelling through operators and the corporate bookmaker licensing base in the Northern Territory, citing economic effects of problem gambling by local online gamblers.

Since then, Australia has developed a patchwork quilt of POC rates, with Victoria lifting its rate from 8 percent to 10 percent in mid-2021 as state market rivalries and industry conditions evolved.

Our premium content is available to users of our services.

To view articles, please Log-in to your account, or sign up today for full access:

Opt in to hear about webinars, events, industry and product news

To find out more about Vixio, contact us today
No items found.