Tabcorp won’t take as much of a financial hit as its peers when Victoria’s new point-of-consumption tax comes in play according to insider and financial analysts.
As the Victorian government announced that it will implement an 8 percent tax on all wagers placed within the state, the company release a statement saying it would be no worse off.
As per the May 15 announcement by Treasurer Tim Pallas, all online betting operators will soon be required to record and report all bets made by Victoria residents.
Higher Payments Can Be Offset
For Tabcorp, the new levy will be 1.5 percent more than the 6.5 percent it currently pays as a general tax. However, despite the increase, Australia’s largest betting company has told investors and the industry at large that it’s likely to be business as usual due to its existing tax liabilities.
“It was important that the government recognised the substantial amount of wagering tax that Tabcorp and its joint-venture partner, the Victorian racing industry, already pays,” read the May 15 press release.
Although the mechanics are yet to be discussed, Racing Victoria has confirmed that Tabcorp will be able to offset other payments against the new point-of-consumption tax. In response to the news, financial experts at UBS and Credit Suisse haven’t confirmed that it won’t impact the operator’s core business.
“Tabcorp will also incur a 1.5 per cent increase in its average tax rate in Victoria but could see an offset — possibly through lower industry product fees — for tax already paid through its retail licence,” UBS analyst Matt Ryan told The Sunday Moring Herald.
Leveling the Playing Field
As well as the option to offset payments, the introduction of a state-based tax will be seen as a win for Tabcorp in general. Up until now, the government backed entity has been the only operators forced to state taxes across the country.
In contrast, remote operators like Sportsbet, Ladbrokes and Bet365 have only had to pay wagering taxes in the Northern Territory where they hold a licence. This dynamic has allowed these offshore businesses to enjoy lower operating costs and, in turn, better prices for customers.
However, when Victoria joins South Australia and Western Australia in implementing a point-of-consumption tax, remote operators will lose their advantage. As a counter to the impending changes, companies such as CrownBet have been looking to consolidate their assets.
The Stars Group acquired a 62 percent stake in CrownBet on February 27 and later paid $300 million to take control of William Hill’s Australian assets. While Tabcorp may be set to pay more in taxes from January 2019, the industry is set for a major shake-up in 2019 which may play into the Australian company’s hands.