Legal sports betting in Queensland is likely to get more expensive. The Australian state is increasing the tax rate on operators, as well as introducing a new tax on items previously exempt.
Cameron Dick, Queensland’s treasurer, stated that the point in consumption tax on wagering companies is going up as of this month. With the new budget, it will increase from 15% to 20%. In addition, operators need to be ready to start paying the tax on bonus bets, as well as free bets.
The increase will benefit Racing Queensland, as will a reallocation of tax revenue. The racing regulator will now begin to receive 80% of the revenue, whereas it previously took just 35%. Dick claimed the new levy would ensure international betting operators financially support Queensland’s racing industry.
Millions More For Racing Queensland
The Treasury projects that Racing Queensland will receive approximately AU$80 million (US$57.64 million) in annual funding. In the 2020-21 fiscal year, the regulator received AU$32.5 million (US$23.4 million).
The new money will be used for infrastructure and clubs, as well breeding schemes and prize money. Dick explained that all operators need to “pay their fair share” and invest in the future of racing in Queensland. The tax arrives almost a year after the Queensland government began using more Point Of Consumption Tax revenue from other sources to fund the racing industry.
Ultimately, it may be the gamblers who pay that share and do the investing. Operators may look for ways to reduce the impact on their bottom line, which means they may offer lower odds. However, Dick added that this is not supposed to be a tax on bettors, but a tax on “deep-pocketed” online betting operators.
The increased tax rate comes on the heels of changes to Queensland’s gambling ecosystem. At the end of last month, legislators received for review the Casino Control Amendment bill. This, among other things, introduces cashless gaming and gives the state’s gaming regulator a lot more control.
It authorizes fines of up to AU$50 million (US$35.46 million) for violations of gambling laws. However, it doesn’t specify how much, if any, of the revenue would go to Racing Queensland.
The tax also follows an assertion by the treasurer that there will be funding for two major Queensland projects. The new budget includes a method to build an aeromedical hub at Brisbane Airport, which will cost AU$72 million (US$51.88 million). It also covers AU$334 million (US$240.68 million) in funding for the Royal Flying Doctor Service for the next decade.
A Win for Tabcorp
The change in the tax rate reportedly caught the gaming industry off guard. Responsible Wagering Australia, a group representing operators like Entain, PointsBet, and others, assert that the decision comes “without any consultation” with the online gambling community. Tabcorp isn’t complaining, however.
The tax changes and the resulting changes to Racing Queensland will also appeal to Tabcorp. As it rolls out of its demerger, the gaming company believes the new tax scheme is more equitable. As a result, it can put its troubled past with Racing Queensland behind it.
Racing Queensland brought Tabcorp before the Supreme Court in 2019. It wasn’t happy with the firm’s attempt to transfer taxes through reduced fees to the regulator.
Tabcorp, at the time, wasn’t happy that it was making greater contributions than outside operators. It has routinely asserted that it was paying twice what other operators paid and responded by cutting its contributions.
With the new tax scheme in place, Tabcorp is ready to pay AU$150 million (US$108.1 million) to Racing Queensland and the Queensland Government as part of the settlement of the ongoing dispute. The budget reforms must be implemented by March 31 of next year for the settlement to be fulfilled.
Tabcorp recently presented its latest financial health report to investors and the industry. Commenting on its 2021 performance, the company showed group revenue of AU$5.6 million (US$4.04 million). This was an 8.8% increase over 2020.