Australian gambling operator Crown Resorts has circumvented making payments of almost AU$200 million over the past seven years. The casino behemoth has managed to avoid making the due payments by describing marketing costs as “winnings” paid out from its venues’ poker machines at the time when it calculated its gambling tax bill.
Yesterday, the Royal Commission into Crown Resorts in Victoria that the casino venue has been deducting costs of loyalty scheme points, free accommodation and meals from the money paid out by the 2,628 pokies hosted at its Melbourne venue for at least 7 years.
As explained by Mark Mackay, the executive general manager of gaming machines at Crown Resorts, in February 2021 the CEO of Crown Melbourne Xavier Walsh asked him to calculate how much these actions saved Crown from 2014 to 2019. According to a spreadsheet named “potential gaming tax underpayments”, the overall amount came to AU$167 million. Still, as explained by Mr Walsh, the actual total could be closer to AU$200 million in case the past two years were also included in the spreadsheet.
Crown Melbourne’s CEO said that the gambling company believed it was entitled to make the deductions. He, however, agreed that the aforementioned spreadsheet had been made due to concerns regarding the “ambiguity” in the gaming tax legislation of the state.
Due Pokie Tax Concealed as Winnings Paid Out to Casino Patrons
As explained by the counsel who assisted the probe – Geoffrey Kozminsky – the gambling tax that is supposed to be paid to the state of Victoria by Crown Melbourne is based on the gross gambling revenue, or in other words, the total sum of money that the casino venue received from its gambling operations minus the overall winnings that were paid out to its customers.
Mr Kozminsky claims that loyalty program benefits cannot be considered winnings, but Mr Mackay responded that, in his opinion, the definition of winnings is exactly where the ambiguity is. Besides, Mr Mackay agreed that at least since February 2021, the Australian gambling giant was either not entitled, or there was a risk it was not entitled, to deduct some of the expenses (or all of them) that had been identified in the spreadsheet. He further agreed that the gambling operator had adopted the practice to benefit its bottom line.
The internal tax documents of the company refer to the cost of various loyalty program benefits as jackpot expenses. Mr Mackay, who has been occupying the position of executive general manager of gaming machines since 2017, explained that they have always been called this way but said he did not know whether the name was aimed at concealing their true nature.
As the inquiry heard, Mr Mackay was ordered to produce the abovementioned spreadsheet on February 26th – only several days after the Victorian Government announced the establishment of the Royal Commission into the operating licence of Crown Melbourne following the damning report of NSW Commissioner Patricia Bergin. Later, the Royal Commission asked the directors of the casino venue to provide information regarding any possible breaches of its agreements with the Victorian Government. Crown Resorts, however, had not handed over the spreadsheet.