A tax hike for Sydney’s Star casino may have morphed into a government headache

The announcement landed with a thud while an unsuspecting Star casino was looking the other way.

Poker machines at Sydney’s gambling behemoth would be hit with a major tax hike under the NSW government proposal unveiled just before Christmas, and four days after the corporate watchdog launched action against former and current top brass at Star Entertainment Group for allegedly breaching the law.

The Star’s flagship Sydney casino employs 4000 people.

Flavio Branceleone

For a government in the thick of a crusade to overhaul the state’s gambling industry and on the hunt for a pre-election revenue boost, the casino giant – still reeling from two damning inquiries that exposed widespread money laundering and links to organised crime – was an easy target.

When Treasurer Matt Kean lobbed the proposal to increase the tax rate on casino poker machines to 60.67 per cent and spend $364 million on communities hit by natural disasters, The Star was apparently blindsided. But Kean was unapologetic.

“If casinos want to lose their social licence, if they want to turn a blind eye to things like money laundering, then the NSW government thinks it’s not unreasonable to expect them to make a small contribution towards floods victims,” he said on December 23.

Two months on and shifting sands beneath Sydney’s original harbourside casino suggest Kean’s solution may have morphed into a major problem.

Treasurer Matt Kean was unapologetic when announcing the proposal to hike casino tax rates last year.

Jessica Hromas

The embattled casino giant, which employs about 4000 people in Sydney, on Thursday posted a devastating $1.3 billion net loss after tax as it grapples with the self-inflicted loss of its licences and potential fines of hundreds of millions of dollars.

In the past six months The Star’s share price has fallen by more than 65 per cent, while revenue at its Pyrmont casino has slumped 14 per cent from pre-pandemic levels.

Add to that the crippling fines and remediation costs The Star brought on itself, plus a shinier (pokies-free) local competitor in Crown; the casino has warned a tax hike could ultimately cost jobs.

Protecting jobs at one of the largest employers in Sydney was central to the government’s decision to allow the casino to operate during waves of COVID-19 outbreaks. NSW now has a policy designed to claw back revenue for vulnerable people that could ultimately hit hard-working Sydney families.

Chief executive Robbie Cooke on Thursday refused to weigh in on whether the tax burden could result in the casino’s closure. Unions have urged caution from the government, lest workers pay the cost.

Thursday’s update sets the stage for a high-stakes game between the casino, which warns of an “urgent review” of its Sydney operations, and the government, which is counting on its added casino tax revenue to support its promised return to surplus in 2025.

The tax proposal, which is not yet legislated but was banked in the half-yearly budget review, is fraught for both sides of politics. A spokesman for Kean said the government was not aware of the extent of The Star’s financial duress when the plan was announced in December.

While difficult, it is not impossible for the government to unwind or revise the policy this close to the election. However, the deadline is fast approaching.

To do so would constitute a monster backdown, and the optics of giving a tax cut to a casino in the middle of a debate about gambling reform is hardly desirable.

But a wave of mass job cuts would be even worse. And Kean and Perrottet are smart enough to know that.

( Information from politico.com was used in this report. Also if you have any problem of this article or if you need to remove this articles, please email here and we will delete this immediately. [email protected] )

Leave a Comment

Share to...