Star casino given $300 million pokies tax lifeline by NSW government

The Star casino will be spared from massive tax hikes in exchange for a guarantee to protect thousands of jobs.

The Star casino has been given a pokies tax lifeline worth more than $300 million over three years in exchange for a guarantee to protect 3000 jobs.

Under a transitional arrangement announced by Treasurer Daniel Mookhey on Friday, the casino will be spared from massive tax hikes announced but never legislated by former Treasurer Matt Kean.

The tax on Star’s poker machine profits will increase to 22.91 per cent by July 2027.

From 2030, the tax rate will increase based on revenue generated by pokies. Average poker machine profit revenue greater than $12,500 will be charged a 51.6 per cent tax.

The government will rake in $55 million from the tax changes over the next three years.

NSW Treasurer Daniel Mookhey made the announcement on Friday. Picture : NCA Newswire / Gaye Gerard

However, that is more than $300 million less than the Coalition government planned to tax the casino.

The Coalition government had forecast it would raise $364 million over the next three years by hiking taxes on Star’s pokies profits.

However, the tax rates were never legislated.

The Treasurer said that if the Coalition’s tax rates had been implemented, Star would have gone under.

That prediction was based on data provided to the state government by the casino.

The Star casino building in Pyrmont. Picture: NCA NewsWire / Damian Shaw

Mr Mookhey denied that his government was going soft on The Star, declaring that the new arrangements are designed to ensure the casino stays open and continues to pay tax.

“You cannot collect tax from a dead business,” he said.

Mr Mookhey slammed Mr Kean’s numbers as “fantasy figures written into a budget riddled with fiscal holes”.

As part of the tax reprieve, The Star will be legally required to maintain more than 3,000 jobs by 2030.

“This jobs protection will be enforceable,” Mr Mookhey said.

Penalties will apply if the jobs are lost.

The tax increases will raise $2.7 billion over 10 years.

The final tax rates on The Star’s pokies profits will be the same as the effective tax rate in Victoria, Mr Mookhey said.

If the casino’s financial performance is better than expected, they will pay more tax faster.

The Star’s pokies will also all go cashless by 30 August next year.

DECISION ON STAR CASINO POKIES TAX HIKE EXPECTED SOON

Star Entertainment could learn within days how much tax it will be paying on its pokies profits, with the government on the verge of making an announcement on the matter.

Some form of transitional arrangement to give the casino more time before taxes are increased is on the cards.

Treasurer Daniel Mookhey in June announced that a proposed tax hike on Star’s pokies profits was being delayed, blaming his predecessor Matt Kean for failing to do his homework on the policy.

Last year, Mr Kean announced that Star would pay a 60.7 per cent tax on poker machine profits, raising $364 million in revenue for the government.

However, the tax change was never legislated.

When delaying the tax hike, Mr Mookhey said it could have put jobs at risk.

“Certain businesses are facing big challenges, but it’s a sensible thing to do when you’re dealing with thousands of people’s jobs, to work through it as calmly and methodically as you can,” Mr Mookhey said in June.

The new tax arrangements could give Star more time before it faces tax hikes, in a bid to give the company more time to get back on its feet.

Any discussion about tax changes for Star Entertainment is being kept under wraps within government because it has the capacity to move the share market.

The company has recently suffered a tumbling share price and has made hundreds of workers redundant.

Mr Mookhey could have more to say on the proposed tax arrangements for Star casino as early as Friday.

A spokesman would only say that the Treasurer is “currently considering” his next steps.

Mr Kean announced his proposed tax hike last year without consulting Star Entertainment’s leadership, something about which Mr Mookhey has been highly critical.