Crown’s Betfair Australasia Warns about Point-of-Consumption Tax
Australian gaming companies, including Crown Resorts’ Betfair Australasia, are warning the country’s state governments not to impose a 15% Point-of-Consumption Tax (POCT). The tax mirrors one imposed in 2014 by the United Kingdom, which caused a wave of consolidation in the UK’s online gaming industry.
Crown Resorts is a fighting the 15% POCT by publicly warning state governments in Western Australia, South Australia, and Queensland that it would have to raise prises on consumers. Crown warns, if they are required to do so, more Aussie gamblers will sign up with illegal betting sites.
The three Australian states are considering the tax to generate revenues from the land-based and online casino industries a year after the Australian Senate passed a bill which drove out many international online casino companies. With the competition seemingly gone, the three states might have thought the time to tax the Australian domestic operations had come.
Instead, many Australian online bettors have migrated from the licensed offshore online casinos to the licensed offshore casinos. While Betfair Australasia and its peers might have thought they had a clear path, they’re now swimming with the sharks. They warn, if a 15% POCT is imposed, they’ll be weighted down as they do so.
Betfair Australasia Report
The Brisbane Times reported that Betfair Australasia, a subsidiary of Crown Resorts, had submitted a report to the governments of South Australia and Western Australia to reconsider their Point-of-Consumption taxes. South Australia’s POCT went into effect in the summer of 2017, while Western Australia has passed a similar tax which goes into effect in 2019.
Betfair CEO Tim Moore-Barton claimed any tax hikes would require his company, which operates a betting exchange, to increase its rates. That would cause a certain number of gamblers to leave Betfair’s betting exchange and instead play at unlicensed online exchanges. Moore-Barton claimed several Betfair high rollers already have shifted their accounts in anticipation of POCT raises.
IGA 2016 Passage
In Crown’s scenario, illegal online gaming sites have a clear advantage over domestic operators. The Interactive Gaming Amendment 2016 (passed in August 2017) drove out offshore online casinos which operated in the UK and Canada regulated markets. Australia coordinated with the UK and Canada in enforcement, so companies which wanted to operate legally in other Commonweath nations had to cease operations in Australia.
The publicly-traded companies like 888, William Hill, and Ladbrokes left the Australian market. Hundreds of private companies continued to sign up Australian players. These illegal offshore online casinos pay no taxes on their revenues and therefore can operate with wider margins. Crown, Tabcorp, and Tatts convinced lawmakers to push out the foreign competition, only to find a more formidable set of operators ready to fill the void.
Risk/Reward of Unlicensed Online Gaming
To register with such sites, Aussie punters have to flout the country’s gaming laws. Many are loathe to do so if the games are comparable. Gamblers are not prosecuted under Australian law, but they face risks in dealing with unlicensed gambling sites. Operators could refuse to pay winnings, or use unfair terms and conditions to disallow winning sessions. If prices rise in the legal market, though, then the risk/reward factor changes and many will bolt for the illegal sites.
Certain online gambling publications have criticized Betfair Australasia’s report, saying that operators cannot shift every tax burden on to the punter. That is true, though Tim Moore-Barton made that point in his report. The upshot of the Crown Resorts report is Betfair Australasia would see a reduction in revenues, so the governments would see smaller revenues, too. Moore-Barton’s point is higher taxes do not mean higher tax revenues.
Sale of CrownBet
Crown Resorts appears to have an ambivalent attitude towards online gambling, anyway. A little over a year after launching its online betting site, CrownBet, to great fanfare, Crown Resorts announced in December 2017 it was selling the company.
Crown seemed to make the same mistake that Australian lawmakers made. By driving out the licensed online casino companies, Crown thought the way was clear for the Australian semi-monopolies to collect all the customers looking for a new site on which to gamble. Instead, many of those gamblers realized the Australian companies offer inferior products and went to the unlicensed casino sites.