Stellar Compromise Reached in Star Entertainment's Talks with NSW Government

Following a contentious proposal by the state government to significantly raise duties on electronic gaming machines at the Sydney casino, Star Entertainment Group strongly opposed the drastic increase, deeming it unsustainable and implemented without consultation. In August, an in-principle agreement was reached, but the operator resisted the rapid levy hike, fearing the impact on jobs. Constructive engagement later reduced the planned raise, providing relief for Star Entertainment.

Despite the improved conditions, Star Entertainment is yet to stabilize its business. Temporary tax relief addressed some short-term issues, but the company's venues continue to underperform due to a decline in overseas tourists. The FY 2022/23 results reported a full-year loss of $1.6 million, indicating a need for sustained recovery efforts.

While negotiating better conditions, Star Entertainment faces additional costs of approximately AUD 10 million ($6.58 million) in 2024 due to tax rate hikes. The current tax rate on poker machines, excluding GST, will incrementally rise to 22.91% by July 1, 2027. Further increases are slated for July 1, 2030, contingent on average poker machine revenues.

Effective July 1, 2023, duty rates on rebate play and table games will increase. Star Sydney must also pay an extra levy equivalent to 35% of gaming revenue exceeding AUD 1.125 billion ($733 million) annually.

To counteract the increased tax burden, Star Entertainment has sold its Sheraton Grand Mirage Resort Gold Coast property. However, ongoing challenges and inefficiencies, akin to competitor Crown Resorts, persist. Despite the slow return to compliance, Star Entertainment aims to reorganize its business and return to profitability.