Tabcorp claims big tax win in NSW budget, upsetting its corporate bookmaker rivals

Wagering companies will be hit with an increase in the point of consumption tax. Tabcorp will receive $30m to offset its higher payments, but its competitors won’t. They are crying foul.

Tabcorp claimed a tax victory from the NSW state budget that has upset their corporate bookmaker rivals. Picture: Mark Evans/Getty Images

Tabcorp has received a $46m boost to its finances in just two weeks, with the wagering giant claiming another tax win over its corporate bookmaker rivals in Australia’s biggest state.

The NSW government on Tuesday announced a state budget measure to raise the point of consumption tax it collects from wagering operators from the current 10 per cent to 15 per cent from July 1.

Tabcorp, which pays taxes to fund the racing industry in return for an exclusive retail betting ­licence in NSW, will receive a $30m payment from the state over the next 18 months to offset the amount of additional tax it would pay as a result of the point of consumption tax increase.

The NSW government said the changes were introduced to “achieve competitively neutral tax rates across online and offline betting products” and that it expected the measures to raise more than $740m over the next four years.

Tabcorp immediately welcomed the move, which pushed its share price up in afternoon trading, while its rivals accused the government of a “sweetheart deal” with Tabcorp.

Steadily losing market share in recent years and especially when its betting outlets and pubs were shut at the height of Covid, Tabcorp has long complained about what it says are relatively low rates of tax paid by its corporate bookmaker competitors, which are mostly digital-only foreign-owned betting firms.

It has recently increased its lobbying and advertising efforts to win more favourable terms from state governments, having demerged its lotteries arm into a separately listed company and rejected takeover bids of up to $4bn for its wagering and media businesses last year.

Tabcorp will receive $22m in 2022-23 and $8m in 2023-24 in the NSW deal. In a statement to the ASX, Tabcorp said without the NSW “transition payments” its earnings before interest and tax, depreciation and amortisation (EBITDA) would have been about $16m lower based on its revenue in the 2021 calendar year.

The NSW move comes after a similar tax lift in Queensland earlier this month, when the state lifted the point of consumption tax to 20 per cent.

That change is expected to be a boon for Tabcorp, with a reduction in other fees and taxes to hand the company about $30m annually, analysts have forecast.

Tabcorp chief executive Adam Rytenskild said in a statement to the ASX that the NSW government move was a “positive step forward” in creating what Tabcorp said was a more level playing field for bookmakers.

“Online bookies will pay a greater share of wagering tax which can be invested back into the local racing industry and ensures a fairer system,” he said.

“Online betting has changed substantially since the TAB’s ­licences were issued and this is an opportunity to better align with the modern economy.”

Responsible Wagering Australia, the lobby group representing corporate bookmakers such as Sportsbet, Bet365 and Entain, the owner of the Ladbrokes and Neds brands, hit out at the NSW changes and Premier Dominic Perrottet.

“It’s extremely concerning to see the NSW government cave in to a backroom campaign to deliver a single operator such a clear market advantage with little consultation with the wider industry,” RWA chief executive Justin Madden said.

“This Perrottet plan needs real scrutiny in light of the integrity scandal plaguing the Queensland government and its own backroom wagering tax deal.”

RWA had previously criticised the Queensland government for not consulting with the online ­wagering industry before its tax increase was announced.

Tabcorp shares rose 1c to $1.06.