Crown Melbourne faces increased gaming machine tax rates

| By Laura Gumbrell
The Victorian Government have stated that it intends to increase the tax rate for electronic gaming machines at the Crown Plaza Melbourne.

From 1 July 2023, Crown Plaza Casino’s electronic gaming machines (EGMs) will be subject to the same tax rates as EGMs operated in club venues.

The decision to tax Crown Casino at a higher rate follows the Government’s response to the Royal Commission into the casino operator preventing the State from changing regulations without having to pay compensation.

Crown estimates that if the proposed arrangements were in place during FY2019 (being the last financial year prior to COVID-19), the impact on the earnings of Crown Melbourne would have been between AU$35m (£19.9m/€23.6m/US$24.9m) and AU$40m.

The resort therefore estimates that the change is expected to generate up to AU$30 million a year in additional revenue for the State without increasing gambling expenditure.

The minister for consumer affairs, gaming and liquor regulation Melissa Horne commented: “We’re getting on with delivering the reforms and investments needed to strengthen oversight of Crown and the whole Victorian gambling industry, with a focus on harm minimisation.”

The change includes funding to strengthen oversight of the casino with the establishment of the dedicated Victorian Gambling and Casino Control Commission (VGCCC), which will hold the casino operator to account with specialized staff and dedicated casino commissioners.

The VGCCC can hold Crown Plaza to account due to legislation changes in 2021, including a duty for casino operators and their associates to ensure everything they do is ‘conducted with integrity’.

On the new tax rate, machines producing monthly net revenue of AU$12,500 will be taxed 60.67% plus a community benefit levy of 1%. Machines bringing in $6,666.67 to less than AU$12,500 will be taxed 51.17% and those producing AU$2,666 to AU$6,666.67 will be taxed at 46.7%. Machines with revenue below AU$2,666 will have a 0% tax rate.

Treasurer Tim Pallas said: “This is a fair and reasonable change that means Crown is paying the same tax rate on its pokies as smaller, community-based venues throughout Victoria. For too long, Crown has benefited from preferential tax treatment.”

This news comes following the resorts pushing back its bids to be acquired by Blackstone. The meeting was set to take place at 10am Melbourne time on 29 April, but will now take place at 10am Melbourne time on 20 May. Shareholders can also vote by proxy before 10am Melbourne time on 18 May.

The bid of AU$8.87bn was approved by the Crown board despite an inquiry finding Crown unsuitable to operate a casino in Victoria, with an investigation concluding that Crown had engaged in “illegal, dishonest, unethical and exploitative” conduct. This inquiry did not revoke Crown’s licence, however.

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