Budget considerations by Victoria’s Brumby administration have brought a new deal for Melbourne’s Crown Casino.
Looking for more revenue over the next four years, the state government has raised the tax rate on the casino’s pokies (slot machines) by 10 percent, while at the same time allowing the casino to increase its table games from 300 to 500 and double its poker tables from 50 to 100.
The pokie tax increases 1.7 percent each year for six years beginning this year, resulting in a total tax increase of 10.3 percent by 2015. The full tax will be 32.57 percent at that time. The change will bring more than A$60 million to the government over the next four years and add more than 300 jobs at Crown.
The agreement also permits automated table games to be installed, cancels the Health Benefit Levy-currently $4,333 per electronic machine per year-on July 1, 2012, and guarantees that the government will seek no more tax increases before June 30, 2022 at the earliest.
Victoria Gaming Minister Tony Robinson says the tax increase brings Crown into line with taxes paid by other poker operators in the state (although Crown is Victoria’s only casino). He also said the addition of tables would enable Crown to remain competitive with other Australian casinos.
As result, Crown Melbourne CEO David Courtney announced a $46 million upgrade to the casino floor. Crown Executive Chairman James Packer issued a statement that said the agreement will “assist us to maintain the Crown Entertainment Complex as one of the world’s great casinos.”
“These new arrangements now allow us to expand and improve the gaming floor in line with recent and future expansions to Crown’s hotels, restaurants, retail and car parking,” Packer said.
An Australian analyst praised the deal.
“The tax increase underscores the regulatory risk inherent within the sector, particularly in a mature market and when budget deficits are widening,” said Jenny Owen, an analyst at Citigroup Inc. “Crown has achieved a better outcome on tax increases than its local competitor Tabcorp, which recently saw taxes rise at Queensland casinos with no net offset to grow revenue.”
Queensland last year raised the tax rate on slot machines at Tabcorp’s Brisbane and Gold Coast casinos to 30 percent from 20 percent, with the increase taking effect on July 1. At its Townsville property, the rate doubled to 20 percent.
