Star Entertainment has made an agreement with the government of New South Wales (NSW), under which its expected gambling rival Crown Resorts would be blocked from installing electronic gaming machines, also known as pokies, at its new casino venue in Sydney for a 21-year period.
In addition, the gambling group has also agreed on a more favourable tax rate for the services offered at its casino in Pyrmont, which started operation on June 1st for the first time since March 23rd when it was shut as part of the coronavirus lockdown.
Star Entertainment explained that its deal with the NSW authorities means that it will provide it with the exclusive right to remain the one casino in Sydney that offers pokies. It will also receive compensation should Crown Resorts gets the green light to install poker machines before June 30th, 2041. Despite Crown Resorts has denied ongoing industry speculation, there are still rumours that the gambling giant will pursue a permit for poker machines for its VIP casino.
Star Entertainment’s CEO Matt Bekier confirmed that the gambling group now has the certainty that this would not happen, as the new deal guarantees to keep the current operating environment intact for the next 21 years.
Star Entertainment’s Table Games Get a Fixed Tax Rate from 2022
According to local media reports dating back to May 2020, Crown Resorts has been building relationships with some of the largest clubs and RSLs in Sydney, as the gambling operator is facing the chances of opening its Barangaroo casino in February 2021.
The terms of the compensation clause included in the newly-inked deal between Star Entertainment and the NSW government were not revealed, and Crown Resorts refused to make comments on the matter. As explained by the NSW Treasury in a statement, Crown Sydney would not be permitted to operate poker machines at least for the duration of the state’s government agreement with Star Entertainment. On the other hand, the deal will bring revenue certainty to the NSW Government in the long term, as it will allow them to redirect some money to important projects in the state.
As part of the new agreement, the table games of Star Entertainment will see a fixed 29% tax rate from 2022, while its poker machines will start at a fixed 32% rate that is set to increase to 34% after six years. David Fabris, an analyst working at Macquarie, projected that the new agreement would boost the average tax rate for Star to 30% between 2022 and 2044, with the tax rate once again increasing to around 31% from 2028. Those rates are higher than the ones paid not only by Crown casinos in Melbourne in Perth (26% and 21%, respectively) but also by the Star’s casinos operating on the Gold Coast and in Brisbane (26% and 25.6%, respectively).
Star Entertainment resumed its gaming rooms’ operations yesterday, with seating limited to 500 loyalty club members at a time.