Monday, October 21, 2013

Casino taxes: Queensland v The Rest

Queensland Economy Watch has suggested taxation revenue from proposed casino expansion could be maximised with an auction of licences: Qld Government should maximise revenue from casinos

While looking for something else altogether recently in the Queensland budget papers I stumbled upon Casino tax concessions:

The benchmark tax base is assumed to be all casinos operating in Queensland. The benchmark tax rate is assumed to be the highest tax rate that is actually applied in each financial year.
A tax rate of 20% of gross revenue applies for standard transactions in the Brisbane and Gold Coast casinos. A concessional tax rate of 10% applies for gross revenue from standard transactions in the Cairns and Townsville casinos. The tax rate applicable to gaming machines in casinos is 30% of gross revenue in Brisbane and Gold Coast casinos and 20% in the Cairns and Townsville casinos. 
In addition concessional rates of 10% also apply for revenue from high rollers in all casinos. A GST credit is provided to casinos that approximates a reduction in the above tax rates of 9.09%.
I presume the Aquis proposal has bypassed any potential auction by now so it will be interesting to see what tax regime is negotiated and whether the concessional rate for Cairns will be maintained.

The differential tax here for pokies is also interesting and was increased for casinos in 2009. The pokie tax rate at Reef casino had previously been only 10%. The Aquis proposal is actually more heavily weighted to table games relative to pokies than existing Australian casinos in line with Macau gambling trends previously posted: The baccarat boom.

Comparisons with Macau and other international venues are also relevant with expansions also currently proposed or speculated in several jurisdictions: Macau casino operators face tax hike

Macau’s casino concessionaires could face an increased tax burden once their current deals with the special administrative region expire in 2020 and 2022. Hong Kong-based Macquarie Equities Research analyst Gary Pinge says Macau’s government has “a long history of increasing fees and upping taxes after the expiry of each concession contract,” meaning the effective 39% tax rate currently paid by casinos – 35% on gross gaming revenue plus an additional 4% in social contribution tax and license premiums – will likely rise even higher early in the next decade.
Casino taxes constituted 83% of Macau’s total public revenue last year. Nevada’s gaming tax rate is a mere 6.75%, generating around 22% of the state government’s annual revenue. Singapore taxes its two integrated resort casinos at a split rate: 5% for VIP gaming and 15% for the mass market sector (plus 7% GST). The Philippines has adopted a 15% tax on foreigners gambling in Manila’s Entertainment City, while locals pay 27%. Taiwan has proposed a 7% tax rate when it opens its first casino sometime before the end of this decade, rising to 9% after 25 years (plus local taxes not to exceed 7%).
Interesting that tax rates in Macau seem comparatively high. We will have to await further smoke signals on this as the Aquis process proceeds.

Update: A report that Echo (Jupiters) now have the Townsville casino up for sale and asking $75 million.  Would have to check on current market cap for Reef Casino?

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