NSW government delays pokies tax hikes at Star Entertainment, shares surge more than 20pc
NSW Treasurer Daniel Mookhey has pushed back poker machine tax hikes at Star until 2030 on the condition that the company maintain its workforce of more than 3000.
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NSW Treasurer Daniel Mookhey has opted to defer duty rates for poker machines until 2030, to ensure troubled casino group Star Entertainment remains financially viable.
The delay to the introduction of the tax rise – which will have duty rates of up to 51.6 per cent – is conditional on Star maintaining a workforce of more than 3000 at its flagship Sydney casino.
The reversal on the former Perrottet government’s policy – which was expected to take effect this financial year – sent Star’s shares soaring more than 21 per cent early on Friday, before they closed up 18.2 per cent at $1.152.
Star chief executive Robbie Cooke praised Mr Mookhey, and said Mr Mookhey’s Liberal predecessor Matt Kean’s policy was “not sustainable, flawed in its design” and risked “putting the jobs of thousands of NSW team members in jeopardy”.
The company has been negotiating with the NSW government for the past five months after Premier Chris Minns was elected.
“The formal consultative and structured approach implemented by the government has enabled an in-principle agreement to be reached which protects our Sydney team’s jobs and the viability of The Star Sydney,” Mr Cooke said.
“It is also designed to provide employment certainty for team members in arrangements agreed with the United Workers Union. In addition, it will see The Star Sydney introduce a trial of its cashless gaming machine technology in October this year on 50 gaming machines and eight gaming tables.
“The arrangements enable us to continue working at pace to implement the significant reforms required to restore The Star Sydney to suitability, earn back the trust of the community and ensure we remain a valuable contributor to the NSW economy.”
It comes as Star is fighting to maintain its casino licences in NSW and Queensland after it was found to have shown a “lively disregard for the law”, facilitating money laundering and allowing banned gamblers in other states to play at its casinos among other wrongdoing.
According to the financial crimes regulator, Star allowed accused sex slave traders, a murderer for hire, loan sharks and drug traffickers to gamble billions of dollars at its casinos for years, despite details of their crimes being publicly available.
A tightening of regulation has placed Star under financial pressure. But the company blamed the former Perrottet government’s proposed tax reform when it announced a writedown of almost $1bn on its Sydney casino in February. In April, said it would sack 500 people – mainly in Sydney – as part of a $100m cost-cutting program in the wake of a “rapid deterioration” across its operations, although it said this had nothing to do with the tax changes.
Mr Mookhey said on Friday that a “transitional levy” would precede the tax rise, with Star required to pay more tax on its poker machines as its gaming revenue rises until the changes begin on July 1, 2030.
Overall, he said the casino duty rates were expected to raise $2.7bn over 10 years from The Star, including more than $529m from existing rates.
“The government has listened to workers, unions and management and has negotiated an agreement that will protect the jobs of thousands of workers while also seeing The Star pay more duty,” Mr Mookhey said.
“The previous government’s casino duty hike was unrealistic, poorly developed and put thousands of jobs at risk. It was announced without consultation or consideration for the viability of the business and the thousands of workers they employ.
“The advice I received from NSW Treasury is that absent this agreement, if the government proceeded with the announced rates, The Star would be unviable.”
As part of the agreement, Star can request a “good faith review” on or after July 1, 2030 but before September 30, 2030 about the poker machine duty rate, including the “associated thresholds having regard to the trading conditions and EBIT for The Star Sydney” in the years up to the change.
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